Canada's industrial product price index increased 0.4 percent in December, according to Statistics Canada. Of the 21 major commodity groups, 7 were up, 8 were down and 6 were unchanged.
The growth of the IPPI was primarily driven by higher prices for energy and petroleum products (+5.5 percent), which posted their largest gain since May 2016 when prices rose 6.6 percent. The increase in this commodity group was mainly attributable to motor gasoline (+7.1 percent), light fuel oils (+6.7 percent) and diesel fuel (+5.3 percent). The IPPI excluding energy and petroleum products declined 0.4 percent in December.
Chemicals and chemical products (+0.4 percent) also contributed to the increase in the IPPI, but to a lesser extent. Petrochemical prices (+3.9 percent), particularly prices for aromatic hydrocarbon gases (+9.6 percent), were the main contributor to the increase in chemicals and chemical products, while lower prices for plastic resins (-1.6 percent) moderated the gain in this group.
Lower prices for meat, fish and dairy products (-1.8 percent) moderated the advance in the IPPI, mainly due to lower prices for fresh and frozen pork (-6.7 percent) and fresh and frozen beef and veal (-3.2 percent). This was the third consecutive monthly decline for this commodity group.
A decrease in prices for motorized and recreational vehicles (-0.7 percent) also moderated the growth of the IPPI in December. The main reason for the decline in this commodity group was lower prices for passenger cars and light trucks (-0.8 percent) and, to a lesser extent, motor vehicle engines and motor vehicle parts (-0.4 percent) as well as aircraft (-0.7 percent). Lower prices of motorized and recreational vehicles were closely linked to the gain in the Canadian dollar relative to the US dollar.
Primary non-ferrous metal product (-1.3 percent) prices also declined in December, following a 2.4 percent increase the previous month. The decline was largely attributable to lower prices for unwrought precious metals and precious metal alloys (-4 percent), particularly unwrought gold and gold alloys (-7.1 percent). Higher prices for unwrought copper and copper alloys (+3.3 percent) and basic and semi-finished products of aluminum and aluminum alloys (+2 percent) moderated the decline in this commodity group.
Some IPPI prices are reported in US dollars and are converted to Canadian dollars using the average monthly exchange rate. As a result, any change in the value of the Canadian dollar relative to the U.S. dollar will affect the level of the index. From November to December, the Canadian dollar rose 0.8 percent relative to the US dollar. If the exchange rate had remained constant, the IPPI would have increased 0.5 percent instead of 0.4 percent.
The IPPI rose 2.2 percent during the 12-month period ending in December following a 1.5 percent increase in November.
Compared with December 2015, the advance of the IPPI was largely attributable to higher prices for energy and petroleum products (+10.5 percent), which posted their strongest year-over-year growth since February 2012. The increase in this commodity group was mainly driven by light fuel oils (+24.9 percent), motor gasoline (+8.1 percent) and, to a lesser extent, diesel fuel (+12.7 percent) and heavy fuel oils (+28.8 percent). On a year-over-year basis, the IPPI excluding energy and petroleum products rose 1.1 percent.
Primary non-ferrous metal products (+9.3 percent) also contributed significantly to the year-over-year increase in the IPPI. Unwrought precious metals and precious metal alloys (+9 percent), other unwrought non-ferrous metals and non-ferrous metal alloys (+28 percent), and unwrought copper and copper alloys (+18.5 percent) were the main source of the year-over-year increase in primary non-ferrous metal products.
On a year-over-year basis, the advance of the IPPI was largely offset by lower prices for motorized and recreational vehicles (-1.7 percent). The main source of the decline in this group was lower prices for passenger cars and light trucks (-2.1 percent) and, to a lesser extent, motor vehicle engines and motor vehicle parts (-1.8 percent) and aircraft (-1.8 percent).
The decrease in prices for meat, fish and dairy products (-2.7 percent), which was mainly attributable to lower prices for fresh and frozen beef and veal (-14.1 percent), also slowed the growth of the IPPI compared with December 2015.
Raw Materials Price Index
The RMPI rose 6.5 percent in December following a 1.6 percent decrease in November. Of the six major commodity groups, five were up and one was down.
The growth of the RMPI was primarily driven by higher prices for crude energy products (+14.2 percent), particularly conventional crude oil (+15 percent), which posted its largest gain since May 2016. The RMPI excluding crude energy products rose 1.1 percent.
Prices for animals and animal products (+3.2 percent) had a modest contribution to the growth of the RMPI. The gain in this commodity group was primarily driven by higher prices for live animals (+5.6 percent), particularly hogs (+11.2 percent) as well as cattle and calves (+4.5 percent).
The logs, pulpwood, natural rubber and other forestry products group (+2.3 percent), particularly natural rubber (+16.7 percent), also exerted upward pressure on the RMPI.
The RMPI rose 17.2 percent during the 12-month period ending in December, following a 4.4 percent gain in November.
The increase in the RMPI in December was largely attributable to higher prices for crude energy products (+38.2 percent), particularly conventional crude oil (+40.1 percent). The RMPI excluding crude energy products rose 5 percent.
Metal ores, concentrates and scrap were also up from December 2015, with prices rising 17.9 percent following a 16.6 percent increase the previous month.
The year-over-year gain in the RMPI was moderated by lower prices for animals and animal products (-3.7 percent), which have been declining since July 2015. The main source of the decline in this group was lower prices for live animals (-9.0 percent), particularly cattle and calves (-12.3 percent) and hogs (-8.3 percent).
