Source: Statistics Canada
Prices for manufactured products edged up in February, as higher prices for primary metals were partly offset by lower prices for motor vehicles. The growth in raw materials prices was slowed substantially by a drop in crude oil prices.
From January to February, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 0.1%, a marked slowdown compared with the increases of 1.1% in December and 1.0% in January. The growth in prices for petroleum and coal products slowed considerably after three months of vigorous increases. Excluding petroleum and coal products, the IPPI would have remained unchanged in February.
Strong growth for primary metal products and, to a lesser extent, fruit, vegetables and feed products was largely offset by lower prices for motor vehicles and other transport equipment.
On a 12-month basis, the IPPI fell 0.8% in February. Lower prices for motor vehicles and other transport equipment, as well as primary metal products, were strongly offset by the significant increase in prices for petroleum and coal products. If petroleum and coal products were excluded, the IPPI would have declined 3.6% instead of 0.8%.
The exchange rate, reflecting the ongoing effect of the Canadian dollar’s strength in relation to its U.S. counterpart, had a sizable effect on the movement of prices in February. The Canadian dollar rose 1.2% against the US dollar, whereas it declined 0.8% the previous month. If the exchange rate that is used to convert these prices had remained unchanged in February, the IPPI would have risen 0.4% compared with January instead of 0.1%, and on a 12-month basis, the IPPI would have risen 3.4% rather than falling 0.8%.
The growth of the Raw Materials Price Index (RMPI) slowed with a month-over-month increase of 0.5% following a 3.6% surge in January. Significant increases for vegetable products and non-ferrous metals in February were partly offset by a 1.0% decrease for mineral fuels. Excluding mineral fuels, the RMPI would have risen 2.2%, down slightly from the 2.5% rise posted in January.
Compared with February 2007, raw materials cost plants 14.9% more. The rise in the index was driven primarily by higher prices for mineral fuels and vegetable products. Without mineral fuels, the RMPI would have risen 1.8% rather than 14.9%. However, lower prices for non-ferrous metals and animals and animal products moderated the year-over-year increase.
In February, the IPPI was 115.6 (1997=100), up from January’s revised level of 115.5. The RMPI was 190.0 (1997=100), up from January’s revised level of 189.1.