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Statistics Canada: CPI Up 1.7% in November

Canadian Industrial Product Price Index Down in November

Prices for products sold by Canadian manufacturers, as measured by the Industrial Product Price Index, decreased 0.8 percent in November, mainly due to lower prices for energy and petroleum products, according to new data from Statistics Canada.

Prices for raw materials purchased by Canadian manufacturers, as measured by the Raw Materials Price Index, fell 11.7 percent, largely reflecting lower prices for crude energy products.

Of the 21 major commodity groups, 3 were down, 17 were up and 1 was unchanged.

Although prices for most of the major commodity groups rose compared with October, the IPPI fell in November. The decline in the index was mainly due to lower prices for energy and petroleum products (-6.6 percent) and, to a lesser degree, chemicals and chemical products (-1.6 percent).

The decline in energy and petroleum products was mainly attributable to lower prices for motor gasoline (-10.7 percent), which posted its largest decrease since January 2015 (-12 percent). Light fuel oils (-6.4 percent) and diesel fuel (-4.8 percent) also pulled this commodity group down. The IPPI excluding energy and petroleum products rose 0.2 percent.

Following three consecutive monthly increases, chemicals and chemical products were down in November, mainly driven by lower prices for petrochemicals (-8.8 percent).

Of the 17 commodity groups that were up in November, higher prices for motorized and recreational vehicles (+0.6 percent) had the greatest moderating effect on the decrease in the IPPI. This increase was mostly attributable to higher prices for motor vehicle engines and motor vehicle parts (+0.8 percent), aircraft (+1.6 percent) and aircraft engines, aircraft parts and other aerospace equipment (+1.4 percent). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Primary non-ferrous metal products (+0.6 percent) also moderated the downturn in the IPPI, mainly due to the increase in unwrought precious metals and precious metal alloys (+1.5 percent). Conversely, unwrought aluminum and aluminum alloys (-2percent) continued to decline in November.

Pulp and paper products (+1 percent) also rose compared with October, mostly due to higher prices for wood pulp (+1.5 percent).

Some IPPI prices are reported in US dollars and converted to Canadian dollars using the average monthly exchange rate. Consequently, any change in the value of the Canadian dollar relative to the US dollar will affect the level of the index. From October to November, the Canadian dollar depreciated 1.5 percent relative to the US dollar. If the exchange rate had remained constant, the IPPI would have decreased 1.2 percent instead of 0.8 percent.

The IPPI rose 2.8 percent in November compared with the same month a year earlier, after increasing 5.2 percent in October.

Energy and petroleum products (+3.6 percent) contributed the most to the year-over-year growth in the IPPI in November. Diesel fuel (+9.5 percent), asphalt (except natural) and asphalt products (+19.9 percent) and light fuel oils (+5.3 percent) were largely responsible for the gain in this commodity group. This growth was moderated by lower prices for motor gasoline (-5.7 percent). The IPPI excluding energy and petroleum products rose 2.6 percent compared with November 2017.

Prices for pulp and paper products (+11.3 percent), particularly wood pulp (+16.5 percent) and newsprint (+17.1 percent), also contributed significantly to the rise in the IPPIcompared with November 2017.

Year over year, primary ferrous metal products rose 14 percent, mainly driven upward by prices for iron and steel basic shapes (+19.1 percent) and wire and other rolled and drawn steel products (+17.4 percent).

Motorized and recreational vehicles were up 2.1 percent compared with November 2017. The growth in this commodity group was primarily driven by higher prices for motor vehicle engines and motor vehicle parts (+2.9 percent), aircraft (+5.2 percent) and passenger cars and light trucks (+0.7 percent).

The year-over-year increase in the IPPI was moderated by primary non-ferrous metal products (-5.6 percent). Lower prices for unwrought precious metals and precious metal alloys (-5.7 percent), unwrought aluminum and aluminum alloys (-14.1 percent), and other unwrought non-ferrous metals and non-ferrous metal alloys (-10.9 percent) were mainly responsible for the decline in this commodity group.

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