Canadian Industrial Product Price Index Increases in February

Raw materials price index rose 1.2 percent, led by higher prices for animals and animal products.

Canada's industrial product price index increased 0.1 percent in February, according to Statistics Canada. The increase was mainly due to higher prices for meat, fish and dairy products and primary non-ferrous metal products. The Raw Materials Price Index increased 1.2 percent, as a result of higher prices for animals and animal products.

The IPPI increased for a sixth consecutive month in February. Of the 21 major commodity groups, 8 were up, 10 were down and 3 were unchanged.

Higher prices for fresh and frozen pork (+7.3 percent) and processed meat products, other meats and animal by-products (+3.2 percent) were the main contributors to the gain in the meat, fish and dairy products group. The increase in this commodity group was slightly moderated by lower prices for fresh and frozen beef and veal (-1.0 percent).

The increase in the primary non-ferrous metal products group (+1.5 percent) was mainly attributable to higher prices for unwrought precious metals and precious metal alloys (+1.5 percent), unwrought aluminum and aluminum alloys (+2.8 percent) and unwrought copper and copper alloys (+2.9 percent).

The growth in the IPPI was primarily moderated by energy and petroleum products (-0.7 percent). Lower prices for motor gasoline (-3.2 percent) and, to a lesser extent, natural gas liquids and related products (-16.3 percent) were the main contributors to the decline. Higher prices for lubricants and other petroleum refinery products (+5.6 percent) and asphalt (other than natural) and asphalt products (+2.3 percent) offset lower prices for energy and petroleum products. The IPPI excluding energy and petroleum products rose 0.3 percent.

Prices for motorized and recreational vehicles (-0.4 percent) decreased for a third consecutive month in February. Lower prices for passenger cars and light trucks (-0.5 percent), motor vehicle engines and motor vehicle parts (-0.3 percent) and aircraft (-0.5 percent) were mainly responsible for the decline in this commodity group. The lower prices for motorized and recreational vehicles were closely linked to the appreciation of the Canadian dollar relative to the U.S. dollar.

Some IPPI prices are reported in U.S. dollars and 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 January to February, the Canadian dollar rose 0.6 percent relative to the U.S. dollar. If the exchange rate had remained constant, the IPPI would have advanced 0.2 percent instead of 0.1 percent.

The IPPI rose 3.5 percent over the 12-month period ending in February, after increasing 2.5 percent in January. This was the strongest year-over-year increase since April 2014.

The increase in the IPPI compared with February 2016 was mostly attributable to higher prices for energy and petroleum products (+26.9 percent), which posted their strongest year-over-year increase since October 2011. Motor gasoline (+28.9 percent), light fuel oil (+34.8 percent) and, to a lesser extent, diesel fuel (+26.4 percent) were the primary contributors to the rise in this commodity group. The IPPI excluding energy and petroleum products was up 0.8 percent on a year-over-year basis.

Compared with February 2016, primary non-ferrous metal products (+7.9 percent) also contributed to the increase of the IPPI, albeit to a lesser extent. Higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+29.8 percent) and unwrought copper and copper alloys (+23.5 percent) led the gain in this commodity group. Unwrought precious metals and precious metal alloys (+2.4 percent) and unwrought aluminum and aluminum alloys (+7.0 percent) were also up compared with the same month a year earlier.

Year over year, chemicals and chemical products rose 5.2 percent, primarily due to higher prices for petrochemicals (+28.4 percent), particularly aromatic hydrocarbon gases (+39.9 percent) and liquefied refinery gases, and acyclic hydrocarbons not elsewhere classified (+26.2 percent). Prices for basic chemicals (+6.2 percent) and plastic resins (+4.6 percent) also exerted upward pressure on this group.

The year-over-year increase in the IPPI was mainly offset by lower prices for motorized and recreational vehicles (-3.2 percent), particularly passenger cars and light trucks (-3.4 percent) and, to a lesser extent, motor vehicle engines and motor vehicle parts (-2.3 percent) and aircraft (-4.2 percent).

Raw Materials Price Index

The RMPI was up 1.2 percent in February, following a 1.7 percent increase in January. Of the six major commodity groups, five were up and one was down.

Animals and animal products (+2.9 percent) were the main contributors to the gain in the RMPI. Prices for live animals (+5.0 percent), particularly hogs (+16.3 percent), were largely responsible for the rise in this commodity group. After declining 39.4 percent from June to November 2016, prices for hogs began increasing in December. Lower prices for cattle and calves (-1.0 percent) slightly offset the advance in animals and animal products.

Metal ores, concentrates and scrap also significantly contributed to the growth in the RMPI in February, with prices rising 1.8percent following a 1.5percent increase the previous month.

Crude energy products (+0.8 percent) posted a third consecutive monthly increase in February. The gain in this commodity group was mainly attributable to higher prices for conventional crude oil (+0.8 percent). The RMPI excluding crude energy products was up 1.6 percent.

The RMPI rose 23.7 percent in the 12-month period ending in February, following a 23 percent increase in January. This was the strongest year-over-year gain in the RMPI since July 2011.

Compared with February 2016, the advance of the RMPI was in large part due to higher prices for crude energy products (+60.8 percent), primarily conventional crude oil (+64.4 percent). The RMPI excluding crude energy products rose 5.5 percent.

To a lesser extent, metal ores, concentrates and scrap (+15 percent) also contributed to the year-over-year increase in the IPPI, following a 17.5percent gain in January.

Year over year, lower prices for animals and animal products (-1 percent) offset the growth in the RMPI. The decline in this commodity group was primarily due to lower prices for cattle and calves (-12.4 percent), but was offset by higher prices for hogs (+5.8 percent).

 

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