In October, the Canadian Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) were up 0.5 percent and 1.7 percent respectively from September, according to Statistics Canada. Both indexes advanced mainly because of petroleum and metal products.

We Deliver Distribution News to Your Inbox Sign up below to receive MDM Update, your free weekly distribution news update by email.

The 0.5 percent increase in the IPPI in October follows advances of 0.4 percent in August and 0.3 percent in September. The IPPI has been on a moderate upward trend since November 2009.

In October, the IPPI gain was mainly led by higher prices for petroleum and coal products (+4.5 percent), primary metal products (+1.3 percent) and, to a lesser extent, chemical products (+0.9 percent).

Higher prices for petroleum and coal products resulted partly from reduced supply and post-seasonal maintenance restarts of refineries in the U.S. Prices for primary metal products were driven upward by steadily growing demand for precious metals. Furthermore, aluminum, copper and nickel prices rose largely because of reduced supply.

The IPPI advance in October was moderated by a 0.9 percent decline in motor vehicles and other transportation equipment and, to a lesser extent, lower prices for pulp and paper products (-0.8 percent) and electrical and communication products (-0.9 percent). These decreases were attributable to a 1.5 percent appreciation in the value of the Canadian dollar relative to the US dollar.

Some Canadian producers who export their products to the United States are generally paid on the basis of prices set in U.S. dollars. Consequently, the strength of the Canadian dollar in relation to the U.S. dollar had the effect of reducing the corresponding prices in Canadian dollars.

Excluding petroleum and coal prices, the IPPI would have remained unchanged in October.

IPPI 12-Month Change
The IPPI rose 2.3 percent in October compared with the same month a year earlier, after advancing 1.5 percent in September. The rising trend continued its moderate acceleration and the IPPI posted its seventh consecutive increase. The October advance was the largest since November 2008.

Year over year, the increase in the IPPI was mainly a result of higher prices for primary metal products (+11.0 percent), petroleum and coal products (+7.7 percent) and, to a lesser extent, chemical products (+3.7 percent).

The 3.6 percent appreciation of the Canadian dollar relative to the U.S. dollar dampened the IPPI year-over-year advance in October.

Prices for motor vehicles and other transportation equipment, which are particularly sensitive to the exchange rate, fell 1.6 percent in October compared with the same month a year earlier, continuing the downward movement that began in October 2009.

Year over year, the IPPI excluding petroleum and coal would have increased 1.8 percent in October, following a 1.3 percent advance in September. This was the sixth consecutive year-over-year increase.

Raw Materials Price Index
The Raw Materials Price Index (RMPI) increased by 1.7 percent in October, primarily because of higher prices for mineral fuels (+2 percent), non-ferrous metals (+2.8 percent) and vegetable products (+5.1 percent). Crude oil prices were up 2.5 percent in October, after falling 3.7 percent in September.

In October, lower prices for animal and animal products (-1.4 percent) slightly moderated the increase in the RMPI. Excluding mineral fuels, the RMPI would have increased 1.4 percent in October, continuing its upward trend that began in July 2010.

Compared with the same month a year earlier, the RMPI rose 5 percent, following a 5.7 percent advance in September. Year-over-year, the RMPI has been on an upward trend since November 2009. Prices of non-ferrous metals (+15.4 percent), vegetable products (+23.5 percent), animal and animal products (+9.3 percent) and ferrous materials (+18.6 percent) were the main contributors to the RMPI year-over-year increase in October. Mineral fuels (-2.5 percent) and wood products (-0.4 percent) registered the only year-over-year declines.

Excluding mineral fuels, the RMPI would have increased 12.2 percent compared with October 2009, the largest advance in the last 12 year-over-year movements.