The Industrial Product Price Index (IPPI) rose 0.3 percent in January, led by petroleum products and primary metals, according to the latest release from Statistics Canada. The Raw Materials Price Index (RMPI) edged up 0.1 percent, primarily because of higher prices for non-ferrous metals and wood.
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The IPPI increase in January follows a 0.9 percent decline in December. The advance of the index was largely because of higher prices for petroleum and coal products (+2.1 percent) and primary metal products (+1.9 percent).
The increase in petroleum and coal product prices was mostly the result of gasoline (+3.5 percent). The upward movement of gasoline prices in January was a turnaround, as prices had fallen in the previous five months.
Primary metal prices (+1.9 percent) rose for the first time since August 2011, pushed higher by copper and copper alloy products (+6.8 percent), aluminum products (+2.8 percent) and nickel products (+8.1 percent). The increase in copper and aluminum prices was largely because of reduced supply, while nickel prices were driven by stronger demand for steel.
Aside from these increases, a few product groups showed some downward movement in January, particularly motor vehicles and other transportation equipment (-0.5 percent). Motor vehicle prices were affected by the 1.0 percent appreciation of the Canadian dollar relative to the US dollar.
Some Canadian producers who export their products are generally paid on the basis of prices set in US dollars. Consequently, the strength of the Canadian dollar in relation to the US dollar in January had the effect of reducing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have risen 0.6 percent instead of 0.3 percent.
The IPPI excluding petroleum and coal prices was unchanged in January, following a 0.4 percent decline in December.
The IPPI increased 2.3 percent in January compared with the same month a year earlier, continuing the slowdown in the growth of prices for a fourth consecutive month. Of the 21 major commodity aggregations, 17 were up in January.
Compared with January 2011, the IPPI was pushed upward mainly by higher prices for petroleum and coal products (+11.8 percent). More modest contributions were made by chemical products (+3.9 percent) and motor vehicles and other transportation equipment (+1.8 percent).
Year over year, the growth of petroleum and coal products continued to slow from the most recent high in July 2011.
Compared with January 2011, the IPPI excluding petroleum and coal rose 1.0 percent, a slightly slower pace than in preceding months.
The advance of the IPPI relative to the same month a year earlier was moderated primarily by a decrease in primary metal products (-4.2 percent). This third consecutive decline was mainly the result of lower prices for copper and copper alloy products (-12.8 percent), nickel products (-21.2 percent) and aluminum products (-5.8 percent).
In January, the 1.9 percent year-over-year decline in the value of the Canadian dollar relative to the US dollar contributed to the increase in the IPPI. Without the impact of the exchange rate, the IPPI would have risen 1.9 percent instead of 2.3 percent.
Raw Materials Price Index
In January, the RMPI rose 0.1 percent, following a 2.5 percent decrease in December. The advance was mainly the result of higher prices for non-ferrous metals (+3.6 percent) and wood (+2.4 percent).
All the major non-ferrous metal groups except precious metals and radioactive concentrates were up, including copper concentrates (+9.9 percent) and non-ferrous metal scrap (+3.7 percent).
The increase in wood products was largely the result of an increase in softwood logs and bolts (+3.0 percent). A strengthening in demand for wood, notably because there was favourable weather for construction, contributed to the price rise.
The upward movement in the RMPI was moderated by lower prices for mineral fuels (-1.1 percent). Among mineral fuels, crude oil declined 1.1 percent, its second consecutive monthly decrease.
The RMPI excluding mineral fuels posted a 1.3 percent increase in January, its first advance since August 2011.
Compared with January 2011, the RMPI was up 4.3 percent, continuing the slowdown that started in May. The main contributors to the year-over-year advance of the RMPI in January were higher prices for mineral fuels (+12.2 percent) and animals and animal products (+11.6 percent). The growth of the RMPI was moderated by non-ferrous metals (-12.3 percent), which experienced a fourth consecutive decline.
Year over year, the RMPI without mineral fuels fell 2.4 percent in January, its second consecutive decline.