The 2020 Mid-Year Economic Update_long

Canadian Industrial Product Price Index Declines in November

Raw Materials Price Index fell 4 percent, led by lower prices for crude energy products.

The Canadian Industrial Product Price Index declined 0.2 percent in November, mainly as a result of lower prices for primary non-ferrous metal products, according to Statistics Canada. The Raw Materials Price Index fell 4 percent, led by lower prices for crude energy products.

The IPPI declined for the fourth consecutive month, falling 0.2 percent in November. Among the 21 major commodity groups, 11 were up, 8 were down and 2 were unchanged.

The decline in the IPPI in November was mainly attributable to lower prices for primary non-ferrous metal products (-3.5 percent), which posted their largest decline since April 2013. Unwrought precious metals and precious metal alloys (-5 percent), specifically unwrought silver and silver alloys (-7.1 percent) and unwrought gold and gold alloys (-5.2 percent), were the main reasons for the decline in prices for primary non-ferrous metals. To a lesser extent, lower prices for unwrought copper and copper alloys (-4.3 percent) and unwrought aluminum and aluminum alloys (-3 percent) also put downward pressure on the commodity group.

Also contributing to the decline in the IPPI in November was energy and petroleum products (-0.4 percent). Lower prices for asphalt (except natural) and asphalt products (-4.6 percent), motor gasoline (-1.2 percent), heavy fuel oils (-3 percent), and jet fuel (-3.6 percent) were the main reasons for the decline, while higher prices for diesel fuel (+1.9 percent) and light fuel oils (+1.9 percent) moderated the drop. The IPPI excluding energy and petroleum products declined 0.2 percent in November.

Also contributing to the decline, but to a lesser extent, were lower prices for fruit, vegetables, feed, and other food products (-0.4 percent), specifically other animal feed (-2.5 percent) as well as flour and other grain mill products (-3.4 percent).

Largely moderating the decline in the IPPI in November were higher prices for motorized and recreational vehicles (+1.2 percent), specifically passenger cars and light trucks (+1.3 percent), motor vehicle engines and motor vehicle parts (+0.8 percent) and aircraft (+1.5 percent). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the U.S. 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 October to November 2015, the Canadian dollar depreciated 1.6 percent relative to the U.S. dollar. If the exchange rate had remained constant, the IPPI would have fallen 0.5 percent instead of decreasing 0.2 percent.

The IPPI declined 0.2 percent over the 12-month period ending in November, after decreasing 0.4 percent in October.

The main reason for the year-over-year decline in the IPPI in November was energy and petroleum products (-19.8 percent), specifically lower prices for motor gasoline (-14.3 percent), diesel fuel (-22.5 percent), light fuel oils (-21.1 percent) and heavy fuel oils (-37.3 percent). The IPPI excluding energy and petroleum products increased 3.3 percent in November.

Also contributing to the decline in the IPPI was chemicals and chemical products (-2.4 percent), led by lower prices for petrochemicals (-19.6 percent). Conversely, higher prices for ammonia and chemical fertilizers (+9.9 percent) and chemical products, not elsewhere classified (+5.5 percent) moderated the decline in the commodity group.

Higher prices for motorized and recreational vehicles (+11.5 percent), specifically passenger cars and light trucks (+12.8 percent), motor vehicle engines and motor vehicle parts (+7 percent) as well as aircraft (+18 percent), largely moderated the year-over-year decline in the IPPI.

Also moderating the decline in the IPPI were higher prices for electrical, electronic, audiovisual and telecommunication products (+6 percent).

The RMPI declined 4 percent in November after posting no change in October. Of the six major commodity groups, two were up and four were down.

Lower prices for crude energy products (-5.7 percent) were the main reason for the decline in the RMPI, specifically conventional crude oil (-6 percent). The RMPI excluding crude energy products fell 2.8 percent in November.

Also contributing to the decline in the RMPI were lower prices for animals and animal products (-4.4 percent), specifically hogs (-15.2 percent) and, to a lesser extent, cattle and calves (-3.6 percent).

Prices for metal ores, concentrates and scrap declined 3.9 percent in November. This was the largest decline for this commodity group since April 2013 when prices fell 8.2 percent.

The RMPI declined 16.3 percent over the 12-month period ending in November.

Lower prices for crude energy products (-29.5 percent) were largely responsible for the decrease, specifically conventional crude oil (-30.3 percent). The RMPI excluding crude energy products declined 4.7 percent from the same month last year.

Prices for animals and animal products (-7.4 percent) also contributed to the decline in the RMPI, specifically hogs (-19.8 percent) and cattle and calves (-8.8 percent).

Also contributing to the year-over-year decline in the RMPI was metal ores, concentrates and scrap (-8.9 percent), which posted its 12th consecutive year-over-year decline and its largest drop since February 2014.

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