The 2020 Mid-Year Economic Update_long

Canadian Industrial Product Price Index Down 0.3% in November

Decline was mainly attributable to petroleum and coal products.

The Canadian Industrial Product Price Index (IPPI) was down 0.3 percent in November compared with October, mainly as a result of lower prices for petroleum and coal products, according to Statistics Canada. The Raw Materials Price Index (RMPI) fell 1.9 percent, primarily because of lower prices for mineral fuels, specifically crude oil.

The IPPI declined for the second consecutive month in November. The decrease of the index accelerated slightly, as the decline was 0.1 percent in October. The IPPI has decreased in six of the last seven months.

The decline of the IPPI in November was mainly attributable to petroleum and coal products (-2.8 percent), where a majority of the products, especially gasoline (-4.3 percent) and fuel oils and other fuel (-2.7 percent), posted price decreases. The IPPI excluding petroleum and coal products rose 0.2 percent.

Among other groups that decreased was primary metal products (-0.6 percent), particularly copper and copper alloy products and nickel products.

The IPPI decline was moderated by an increase in motor vehicles and other transportation equipment (0.8 percent), primarily because of higher prices for motor vehicles. The decrease of the Canadian dollar against the U.S. dollar in November was largely responsible for this advance.

Some Canadian producers who export their products report their prices in U.S. dollars. Consequently, the 1 percent depreciation of the Canadian dollar relative to the U.S. dollar in November could have the effect of increasing the corresponding prices in Canadian dollars. Without the measurable impact of the exchange rate, the IPPI would have fallen 0.5 percent instead of 0.3 percent.

Lumber and other wood products (up 0.8 percent) also contributed to moderating the IPPI decline in November. The increase was mostly a result of lumber and ties.

Compared with November 2011, the IPPI was down 0.5 percent, its fourth consecutive year-over-year decrease.

The downward pressure on the index came mainly from petroleum and coal products (-2.6 percent), notably as a result of lower prices for fuel oils and other fuel. The IPPI excluding petroleum and coal products declined 0.2 percent on a year-over-year basis.

Primary metal products (-3.6 percent) also contributed to the year-over-year IPPI decrease. Lower prices for aluminum products and other non-ferrous metal products were responsible for this decline.

Motor vehicles and other transportation equipment (-1.3 percent) posted its third consecutive year-over-year decrease. The decline was primarily a result of the appreciation of the Canadian dollar against the U.S. dollar compared with November 2011.

The 2.9 percent year-over-year increase in the value of the Canadian dollar relative to the U.S. dollar may decrease the IPPI. Without the measurable impact of the exchange rate, the index would have edged up 0.1 percent instead of falling 0.5 percent.

The year-over-year decline in the IPPI was moderated mostly by lumber and other wood products, up 8.6 percent. Also up were fruit, vegetable, feeds and other food products (3.2 percent) as well as meat, fish and dairy products (1.1 percent).

In November, the RMPI, falling 1.9 percent, posted its first decrease in five months, with three of the seven commodity groups down.

The decline of the index was mainly attributable to lower prices for mineral fuels (-3.1 percent), specifically crude oil (-3.4 percent), which decreased for the first time since June. The RMPI excluding mineral fuels fell 0.7 percent in November.

Downward pressure on the RMPI was also exerted by non-ferrous metals (-3.2 percent), especially copper and nickel concentrates (-6 percent) and non-ferrous metal scrap (-3.4 percent).

Conversely, the RMPI decline was moderated primarily by increases in animals and animal products (1.7 percent) and ferrous materials (1.5 percent).

Compared with November 2011, the RMPI was down 8.2 percent, its ninth consecutive year-over-year decrease.

The decline of the index was almost entirely a result of mineral fuels, specifically crude oil (-15.9 percent). The RMPI excluding mineral fuels fell 0.7 percent on a year-over-year basis.

The RMPI was also pulled downward by non-ferrous metals (-3.2 percent), as a result of lower prices for radioactive concentrates (-22.7 percent).

The year-over-year decline of the RMPI was moderated slightly by increases in wood products (5.1 percent) and vegetable products (3.4 percent).

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