Source: Statistics Canada
In April, a second consecutive strong monthly increase in petroleum prices caused indexes for manufactured goods and raw materials prices to reach record levels in Canada.
From March to April, prices charged by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 1.4%. While down slightly from the 1.8% increase observed in March, the growth in prices remained strong for a second consecutive month, pushing the IPPI above its last historical peak reached in April 2007. This increase was almost entirely driven by petroleum and coal products, which continued their upward climb with an increase of 7.9%, similar to the rate recorded in March.
Prices of other IPPI products, with the exception of energy, grew 0.5%; a lower rate of growth compared with the 1.0% increase registered in March, and also lower than the average increase observed for the first three months of 2008. Chemical products and motor vehicles and other transport equipment contributed the most to the rise of the IPPI excluding prices for petroleum and coal products.
On a 12-month-basis, the IPPI rose 1.0%, an acceleration compared with the 0.2% decline recorded in March. The strong rise in prices for petroleum and coal products was partly offset by decreases in the prices for motor vehicles and other transport equipment as well as primary metal products. If energy products were excluded, the IPPI would show a steady decline in prices since September 2007.
The Canadian dollar lost 1.2% of its value in relation to the US dollar in April, after falling 0.3% in March. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 1.1% compared with March instead of an increase of 1.4%. However, on a 12-month basis, the Canadian dollar rose 10.6% compared with the US dollar, and excluding the effect of the exchange rate, the IPPI would have risen 4.0% rather than increasing 1.0%.
The Raw Materials Price Index (RMPI) continued its upward trend with a month-over-month increase of 5.1% in April, after registering a 6.7% rise in March. The RMPI reached a new historical peak, up 22.5% from its last low point in September 2007. The increase of the RMPI in April was mainly driven by strong prices for mineral fuels, which rose significantly for a second consecutive month. If mineral fuels were excluded, the RMPI would have fallen 1.2% and would have registered its first decline after four consecutive monthly increases.
Compared with April 2007, raw materials cost plants 23.0% more. The rise in the index was primarily driven by higher prices for mineral fuels and vegetable products.
