The Canadian Industrial Product Price Index decreased 0.3 percent in August. The Raw Materials Price Index fell 6.6 percent in August, led by lower prices for crude energy products.
The IPPI decreased following three consecutive months of increases. Of the 21 commodity groups, 17 were up, 2 were down and 2 were unchanged.
The main reason for the decline in the IPPI in August was lower prices for energy and petroleum products (-4.7 percent), led by lower prices for motor gasoline (-5.7 percent), light fuel oils (-6.8 percent) and diesel fuel (-5.1 percent). This was the largest decline for energy and petroleum products since January 2015, when prices fell 11.1 percent. The widespread declines for refined petroleum products correspond with a 26.8 percent fall in the price of conventional crude oil since June 2015, putting downward pressure on prices. The IPPI excluding energy and petroleum products increased 0.4 percent.
Also contributing to the decline in the IPPI were lower prices for chemicals and chemical products (-1.7 percent). The decrease was almost entirely attributable to lower prices for petrochemicals (-11.5 percent), which posted its largest decline since January 2015.
Largely moderating the decline in the IPPI were higher prices for motorized and recreational vehicles (+1.4 percent). The gain was led by increases in passenger cars and light trucks (+1.1 percent), motor vehicle engines and motor vehicle parts (+1.2 percent) as well as aircraft (+2.2 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 metals products increased 0.2 percent in August, led by higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+1.9 percent), as well as unwrought precious metals and precious metal alloys (+1.3 percent), specifically unwrought gold and gold alloys (+3.3 percent). Largely moderating the increase in the commodity group were lower prices for unwrought copper and copper alloys (-3.5 percent) and unwrought aluminum and aluminum alloys (-2.2 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 July to August 2015, the Canadian dollar depreciated 2.2 percent relative to the US dollar. If the exchange rate had remained constant, the IPPI would have declined 0.8 percent instead of decreasing 0.3 percent.
The RMPI (-6.6 percent) fell for the second consecutive month, posting its largest decline since January 2015. Of the six commodity groups, two were up and four were down.
Lower prices for crude energy products (-14.8 percent) were again the main reason for the decline in the RMPI, specifically conventional crude oil (-15.3 percent). Global production of crude oil continued to outpace demand, resulting in downward pressure on prices. The RMPI excluding crude energy products declined 0.9 percent.
Also contributing to the decline in the RMPI, but to a lesser extent, were lower prices for metal ores, concentrates and scrap (-2.4 percent).
Raw Materials Price Index
August marked the 13th consecutive year-over-year decline of the RMPI (-24.7 percent) and the largest decrease since August 2009, when prices fell 26.7 percent.
Lower prices for crude energy products (-45.2 percent) were largely responsible for the decline, specifically conventional crude oil (-46.2 percent). The RMPI excluding crude energy products declined 2.6 percent from the same month last year.
Lower prices for metal ores, concentrates and scrap (-8.2 percent), which posted their largest decline since March 2014, also contributed to the year-over-year decline of the RMPI.
