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The Canadian wholesale services price index (WSPI) rose 1.2 percent in the second quarter. Among the eight major wholesale sectors, margins were up in six and down in two.
The increase was led by higher margins for wholesalers of petroleum products (+6.1 percent) in the second quarter. The increase in the petroleum sector resulted from higher margins for gasoline and diesel fuel.
Wholesalers of food, beverage and tobacco (+2.9 percent) posted their sixth consecutive quarterly margin increase, contributing to the rise of the WSPI in the second quarter. The advance was mostly driven by margin increases at wholesalers of dairy and milk, fresh fruit and vegetable, meat, and cigarette and tobacco products.
Margin increases at wholesalers of building material and supplies (+1.7 percent), machinery, equipment and supplies (+0.9 percent) as well as motor vehicles and parts (+0.8 percent) also contributed to the increase in the WSPI.
Following four consecutive quarterly increases, margins for wholesalers of farm products declined 6.9 percent, moderating the second quarter advance of the WSPI. Lower margins for wholesalers of oilseed and grain (-9.5 percent) products was the main contributor to the decline in farm products.
Also moderating the increase in the WSPI were margin declines for wholesalers of personal and household goods (-0.3 percent).
Year over year, the WSPI rose 4.1 percent in the second quarter, the largest year-over-year increase since the first quarter of 2009.
The year-over-year advance in the WSPI was mainly attributable to margin increases in both the farm and petroleum products sectors, with each posting gains of 23.8 percent. Higher crop production in 2013, coupled with growing inventories, put downward pressure on the purchase price for oilseed and grain products. Selling prices did not fall at the same rate as the declining purchase prices, causing margins to increase.
Higher prices for crude oil and natural gas drove margins up in the petroleum sector. The unseasonably cold winter caused natural gas prices to spike significantly.
Wholesalers of food, beverage and tobacco products (+7.6 percent) posted their fourth consecutive year-over-year increase in the second quarter. This was the largest gain for wholesalers of food, beverage and tobacco products since the fourth quarter of 2009. Over the past year, rising food prices, increased tobacco taxes and the drought in California have resulted in margins rising in this sector.
Margin gains for wholesalers of miscellaneous products (+3.5 percent), machinery, equipment and supplies (+1.4 percent), motor vehicles and parts (+1.2 percent) and building materials and supplies (+0.7 percent) also contributed to the year-over-year advance.
Year over year, the margin for personal and household goods declined 0.5 percent.