The 2020 Mid-Year Economic Update_long

Canadian Industrial Product Price Index Declines in September

Raw Materials Price Index rose 3 percent, led by crude energy products.

The Canadian Industrial Product Price Index declined 0.3 percent in September, mainly as a result of lower prices for energy and petroleum products, according to Statistics Canada. The Raw Materials Price Index rose 3 percent, led by higher prices for crude energy products.

Among the 21 major commodity groups included in the IPPI, 15 were up, four were down and two were unchanged.

The decline in the IPPI in September was primarily due to lower prices for energy and petroleum products (-3.6 percent), particularly motor gasoline (-7 percent), which posted its largest decline since January 2015. Higher prices for diesel fuel (+1.7 percent) moderated the decline in energy and petroleum products. The IPPI excluding energy and petroleum products increased 0.2 percent in September and has risen 7.7 percent since September 2013.

Lower prices for chemicals and chemical products (-0.8 percent), specifically petrochemicals (-5.4 percent) and ammonia and chemical fertilizers (-1.8 percent), also contributed to the IPPI decline. The decrease in chemicals and chemical products was somewhat mitigated by higher prices for other basic inorganic chemicals (+1.9 percent).

Higher prices for motorized and recreational vehicles (+0.6 percent) and primary non-ferrous metal products (+1.3 percent) helped moderate the decline in the IPPI in September. The gain in motorized and recreational vehicles was led by passenger cars and light trucks (+0.7 percent), motor vehicle engines and motor vehicle parts (+0.5 percent) as well as aircraft (+0.8 percent). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

The increase in primary non-ferrous metal products (+1.3 percent) was mainly led by higher prices for unwrought copper and copper alloys (+5.5 percent), which posted their largest gain since September 2012. Also contributing to the increase was unwrought aluminum and aluminum alloys (+2.5 percent) as well as unwrought precious metals and precious metal alloys (+0.5 percent).

Some IPPI prices are reported in US 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 US dollar will affect the level of the index. From August to September 2015, the Canadian dollar depreciated 0.9 percent relative to the US dollar. If the exchange rate had remained constant, the IPPI would have decreased 0.5 percent instead of decreasing 0.3 percent.

Over the 12-month period ending in September, the IPPI declined 0.4 percent. The main reason for the year-over-year decline was energy and petroleum products (-23.9 percent), specifically lower prices for motor gasoline (-22.9 percent), diesel fuel (-24.8 percent), light fuel oils (-23.9 percent) and heavy fuel oils (-43.6 percent). The IPPI excluding energy and petroleum products increased 4.2 percent in September.

Chemicals and chemical products (-5.3 percent) also contributed to the decline in the IPPI, led by lower prices for petrochemicals (-34.7 percent). Meanwhile, higher prices for ammonia and chemical fertilizers (+11.8 percent) and chemical products, not elsewhere classified (+7.4 percent) moderated the decline in the commodity group.

Higher year-over-year prices for motorized and recreational vehicles (+13.4 percent), specifically passenger cars and light trucks (+14 percent), motor vehicle engines and motor vehicle parts (+9 percent) as well as aircraft (+21.4 percent), largely moderated the year-over-year decline in the IPPI.

Higher prices for meat, fish, and dairy products (+5.1 percent), specifically higher year-over-year prices for fresh and frozen beef and veal (+14.1 percent) and, to a lesser extent, fresh and frozen pork (+6.5 percent) also tempered the IPPI decrease.

The RMPI rose 3 percent in September, after declining 6.8 percent in August. Of the six major commodity groups, three were up and three were down. The main reason for the increase in the RMPI was higher prices for crude energy products (+8.2 percent), specifically conventional crude oil (+8.7 percent). The RMPI excluding crude energy products edged down 0.1 percent.

Higher prices for metal ores, concentrates and scrap (+1.1 percent) contributed to the increase in the RMPI, while lower prices for animals and animal products (-1.3 percent) moderated the gain.

The RMPI declined 20.9 percent over the 12-month period ending in September. Lower prices for crude energy products (-39.6 percent) were largely responsible for the decline, specifically conventional crude oil (-40.5 percent). The RMPI excluding crude energy products declined 0.7 percent from the same month last year.

Metal ores, concentrates and scrap (-6.3 percent) also contributed to the year-over-year decline in the RMPI, while higher prices for crop products (+7.9 percent) helped moderate the RMPI.

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