The 2020 Mid-Year Economic Update_long

Canadian Industrial Product Price Index Down 0.1% in June

Raw Materials Price Index increases 1.1 percent.

The Canadian Industrial Product Price Index was down 0.1 percent in June, mainly because of lower prices for motorized and recreational vehicles. The Raw Materials Price Index rose 1.1 percent, largely as a result of higher prices for crude energy products.

IPPI Monthly Change

The IPPI posted a third consecutive monthly decline in June (down 0.1 percent), after decreasing 0.5 percent in May. Of the 21 major commodity groups, four were up, 11 were down and six were unchanged.

The decrease in the IPPI was mainly due to lower prices for motorized and recreational vehicles (down 0.3 percent). Lower prices for passenger cars and light trucks (down 0.4 percent) were largely responsible for the decline in this commodity group. The decrease in the prices of motorized and recreational vehicles was closely linked to the appreciation of the Canadian dollar relative to the U.S. dollar.

Fruit, vegetables, feed and other food products (down 0.4 percent) also put downward pressure on the IPPI, mostly because of lower prices for animal feed (down 2.1 percent), which declined for the first time since Nov. 2013.

Primary non-ferrous metal products (down 0.3 percent) was down for the third consecutive month, mainly as a result of lower prices for unwrought precious metals and precious metal alloys, specifically unwrought gold and gold alloys (down 2.3 percent). The decline was moderated by higher prices for unwrought aluminum and aluminum alloys (up 3.4 percent).

Conversely, the decrease in the IPPI was moderated largely by higher prices for meat, fish and dairy products (up 0.8 percent). Meat products, specifically fresh and frozen pork (up 2 percent), were mainly responsible for the advance in this commodity group.

Some Canadian producers who export their products report their prices in U.S. dollars. Consequently, the 0.6 percent increase in the value of the Canadian dollar relative to the U.S. dollar may have had the effect of lowering the IPPI. Without the measurable effect of the exchange rate, the IPPI would have been unchanged instead of decreasing 0.1 percent.

IPPI 12-Month Change

The IPPI rose 3 percent during the 12-month period ending in June, following a 3.4 percent gain in May.

Compared with June 2013, the advance of the IPPI was mainly attributable to energy and petroleum products (up 5.9 percent), specifically motor gasoline (up 6.2 percent), light fuel oils (up 10.5 percent) and diesel fuel (up 7.2 percent). The IPPI excluding energy and petroleum products increased 2.5 percent on a year-over-year basis.

Prices for meat, fish and dairy products were up 7.7 percent from June 2013, primarily as a result of higher prices for meat products, specifically fresh and frozen pork (up 26.5 percent).

Motorized and recreational vehicles (up 3.5 percent) also contributed to the year-over-year increase of the IPPI, because of higher prices for passenger cars and light trucks (up 3.4 percent), motor vehicle engines and motor vehicle parts (up 2.9 percent) and aircraft (up 6.8 percent). On a year-over-year basis, prices for motorized and recreational vehicles have been on an upward trend since July 2013.

To a lesser extent, chemicals and chemical products (up 3.3 percent) and primary ferrous metal products (up 7.8 percent) also contributed to the year-over-year advance of the IPPI.

Compared with June 2013, the increase in chemicals and chemical products was largely due to higher prices for plastic resins (up 10.3 percent) as well as dyes and pigments, and petrochemicals (up 3.5 percent).

On a year-over-year basis, primary ferrous metal products were pushed upward mainly by higher prices for basic and semi-finished iron and steel products (up 8 percent), specifically iron and steel basic shapes (up 12 percent).

RMPI Monthly Change

The RMPI advanced 1.1 percent in June, following a 0.3 percent decline in May. Of the six major commodity groups, two were up, three were down and one was unchanged.

The increase in the RMPI was mainly attributable to higher prices for crude energy products (up 2.2 percent), which posted a second consecutive monthly gain. The advance of this commodity group was led by conventional crude oil, up 2.2 percent from May. The RMPI excluding crude energy products was down 0.2 percent.

To a lesser extent, animals and animal products also contributed to the increase in the RMPI with a 1.3 percent gain in June, following a 2.9 percent decline the previous month. Higher prices for live animals (up 1.9 percent), specifically cattle and calves (up 3 percent) and hogs (up 1.2 percent), were primarily responsible for the advance in the animals and animal products group.

The increase of the RMPI was moderated by crop products (down 1.9 percent), down for the first time since December 2013. Lower prices for wheat (down 7.1 percent) and other crop products (down 1.1 percent) were largely responsible for the decline in this commodity group.

Prices for metal ores, concentrates and scrap (down 0.8 percent) also moderated the advance of the RMPI in June, following a 0.3 percent increase in May.

RMPI 12-Month Change

The RMPI increased 9.2 percent during the 12-month period ending in June, after advancing 7.7 percent in May.

Compared with June 2013, the increase in the RMPI was mainly attributable to higher prices for crude energy products (up 15.6 percent). This was the largest gain since July 2013. Conventional crude oil (up 15.8 percent) was largely responsible for the increase in this commodity group. On a year-over-year basis, the RMPI excluding crude energy products was up 2.6 percent.

To a lesser extent, animals and animal products (up 10.4 percent) also contributed to the year-over-year gain of the RMPI, primarily as a result of higher prices for live animals (up 17.2 percent), particularly hogs (up 21.7 percent) and cattle and calves (up 21.5 percent). On a year-over-year basis, animal prices have been on an upward trend since April 2013.

Prices for logs, pulpwood, natural rubber and other forestry products (up 5 percent) as well as metal ores, concentrates and scrap (up 0.4 percent) were also up compared with June 2013.

The 12-month increase in the RMPI was moderated slightly by lower prices for crop products (down 5.7 percent), which have been decreasing since July 2013. Other crop products (down 6.6 percent), canola (down 19.8 percent) and wheat (down 11.6 percent) were responsible for the decline in crop products.

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