Source: Statistics Canada
The Canadian price indexes for manufactured goods and raw materials registered lower monthly growth in July than in the previous four months, increasing 0.4% and 1.4% respectively, primarily as a result of the slowdown in the rise of petroleum prices.
From June to July, prices charged by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 0.4%, down from the average monthly growth rate of 1.5% observed from March to June. The increase in the index in July was almost entirely attributable to a 2.4% rise in the prices for petroleum and coal products, which was the lowest rate in five months.
The prices for products other than petroleum and coal grew 0.1%, down from the 0.9% gain in June. Among these other products, 10 major groups out of 20 posted increases, led by meat, fish and dairy products. On the other hand, prices for motor vehicles and other transport equipment declined.
The Canadian dollar rose 0.4% in relation to the U.S. dollar in July, after declining 1.7% in June. The relative strength of the Canadian dollar against its US counterpart had a moderating effect on prices, in part because some manufacturers set their prices in US dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 0.5% compared with June instead of increasing 0.4%.
12-Month Change
On a year-over-year basis, the IPPI rose 6.8%, up from the 5.8% increase posted in June, continuing its growth for a fourth consecutive month. Prices for petroleum and coal products were 52.1% higher compared with July 2007 and were the main contributor to the increase in the IPPI.
If petroleum and coal products were excluded, the IPPI would have risen 1.6%, a higher growth rate than the 0.7% recorded in June. Among the other products, chemical products increased 10.9% while fruit, vegetable, feeds and other food products advanced 9.9%. The increases in food products and chemical products were underpinned by rising petroleum and coal product prices in 2007 and 2008.
On a 12-month basis, the Canadian dollar rose 3.6% against the US dollar, and if the direct effect of the exchange rate were excluded, the IPPI would have risen 7.8% instead of 6.8%.
Slower Growth in Raw Materials Prices
The Raw Materials Price Index (RMPI) increased 1.4% in July. This was a slowdown compared with the 4.3% advance in June. The rise of the RMPI was mainly due to a 2.2% increase in the prices for mineral fuels, the lowest advance in five months. If mineral fuels were excluded, the RMPI would have risen 0.2%, registering a first increase after three consecutive monthly declines.
Compared with July 2007, raw materials cost plants 28.9% more, down from the 32.1% increase in June. The rise in the index was mainly attributable to higher prices for mineral fuels and vegetable products, while non-ferrous metals slowed the advance.
