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The Canadian Industrial Product Price Index (IPPI) decreased 0.5 percent in October, mainly because of lower prices for energy and petroleum products. The Raw Materials Price Index (RMPI) declined 4.3 percent, largely as a result of lower prices for crude energy products.
Of the 21 major commodity groups included in the IPPI, 12 were up, four were down and five were unchanged. The decrease in the IPPI was led by lower prices for energy and petroleum products (-4.6 percent), mainly due to lower prices for motor gasoline (-7.2 percent), light fuel oils (-4.3 percent) and diesel fuel (-3.3 percent). The last time motor gasoline decreased to this extent was July 2009 when prices fell 7.2 percent. Growing crude oil supplies and weaker global demand have put downward pressure on prices for refined petroleum products. The IPPI excluding energy and petroleum products increased 0.2 percent in October.
Also contributing to the decline in the IPPI in October was chemicals and chemical products (-0.8 percent), primarily from lower prices for petrochemicals (-4.4 percent), as lower petrochemical feedstock prices have put downward pressure on prices.
Fruit, vegetables, feed and other food products declined 0.6 percent, mainly due to grain and oilseed products, not elsewhere classified (-4.7 percent) as well as other animal feed (-2.4 percent).
Moderating the decrease in the IPPI were higher prices for motorized and recreational vehicles (+0.9 percent), mainly due to higher prices for passenger cars and light trucks (+0.9 percent), motor vehicle engines and motor vehicle parts (+0.9 percent) as well as aircraft (+1.8 percent). The increase in the prices of motorized and recreational vehicles was closely linked to the depreciation of the Canadian dollar relative to the US dollar.
Some IPPI prices are reported in U.S. dollars and are converted to Canadian dollars using the average monthly exchange rate. Consequently, any change in the value of the Canadian dollar relative to the U.S. dollar will affect the level of the index. From September to October, the Canadian dollar decreased 1.8 percent relative to the U.S. dollar. If the exchange rate had remained constant, the IPPI would have declined 1 percent instead of decreasing 0.5 percent.
The IPPI rose 2.5 percent during the 12-month period ending in October. Compared with October 2013, the advance of the IPPI was mainly attributable to motorized and recreational vehicles (+5.1 percent), led by higher prices for passenger cars and light trucks (+5.3 percent) motor vehicle engines and motor vehicle parts (+4 percent) and aircraft (+9.8 percent) .
Moderating the year-over-year increase in the IPPI was lower prices for energy and petroleum products (-3.7 percent), mainly resulting from lower prices for diesel fuel (-8.7 percent), motor gasoline (-2.5 percent) and light fuel oils (-5 percent).
Meat, fish, and dairy products increased 11 percent, reflecting higher prices for fresh and frozen beef and veal (+32.4 percent) and fresh and frozen pork (+17.6 percent).
Chemicals and chemical products (+4.5 percent) also contributed to the year-over-year increase of the IPPI, primarily as a result of higher prices for petrochemicals (+9.9 percent), plastic resins (+7.3 percent) as well as fertilizers, pesticides and other chemical product (+4.4 percent).
Raw Materials Price Index
The RMPI declined 4.3 percent in October, the fourth consecutive monthly decrease and the largest decrease in the index since the 4.4 percent drop in June 2012. Of the six major commodity groups, two were down, three were up and one was unchanged.
Crude energy products (-8.8 percent) contributed the most to the decline of the RMPI in October, largely as a result of lower prices for conventional crude oil (-8.9 percent). The decrease in crude oil prices was partly due to higher crude oil production and a slowdown in world demand. This was the largest decline since June 2012 for crude energy products. The RMPI excluding crude energy products rose 0.6 percent.
The decline of the RMPI was moderated primarily by prices for animals and animal products, which rose 1.8 percent in October after two consecutive monthly decreases, as a result of higher prices for live animals (+2.8 percent), particularly cattle and calves (+3.7 percent) and hogs (+4 percent).
The RMPI decreased 2.3 percent in the 12-month period ending in October, after declining 1.3 percent in September. On a year-over-year basis, it was the largest decrease in the index since November 2013. Compared with the same month a year earlier, the decrease in the RMPI was almost entirely attributable to lower prices for crude energy products (-9.2 percent). Conventional crude oil (-9.3 percent) was mainly responsible for the decrease in this commodity group. On a year-over-year basis, the RMPI excluding crude energy products was up 5.6 percent.
Compared with October 2013 the decline of the RMPI was also moderated by prices for metal ores, concentrates and scrap (+1.6 percent), which posted a sixth consecutive year-over-year increase.