Canada's industrial product price index declined 0.2 percent in December, mainly as a result of lower prices for energy and petroleum products. The raw materials price index fell 5 percent, led by lower prices for crude energy products.

The IPPI has declined 1.7 percent since July 2015. Among the 21 major commodity groups, 5 were down and 16 were up.

The main reason for the decline in the IPPI in December, compared to November, was energy and petroleum products (-5.4 percent), which posted its largest decrease since January 2015 when prices fell 11.1 percent. Lower prices for motor gasoline (-4.5 percent), diesel fuel (-8.3 percent), light fuel oils (-8.3 percent) and heavy fuel oils (-11.5 percent) were the main reasons for the decline in this commodity group. The IPPI excluding energy and petroleum products increased 0.6 percent in December.

Also contributing to the decline in the IPPI were lower prices for meat, fish and dairy products (-1.5 percent), specifically fresh and frozen pork (-6.5 percent) and, to a lesser extent, fresh and frozen beef and veal (-0.8 percent). Prices for fresh and frozen beef and veal have declined 8.1 percent since June.

Prices for primary ferrous metal products (-1.8 percent) also declined in December, led by lower prices for iron and steel basic shapes (-3 percent).

Largely moderating the decline in the IPPI were higher prices for motorized and recreational vehicles (+2.1 percent), specifically passenger cars and light trucks (+2.1 percent), motor vehicle engines and motor vehicle parts (+1.6 percent) as well as aircraft (+3.2 percent). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the U.S. dollar.

Also moderating the decline, but to a lesser extent, was primary nonferrous metal products (+1.4 percent). The increase in the commodity group was primarily attributable to higher prices for unwrought aluminum and aluminum alloys (+4.7 percent) as well as unwrought precious metals and precious metal alloys (+0.7 percent), specifically unwrought gold and gold alloys (+2.1 percent).

From November to December 2015, the Canadian dollar depreciated 3.2 percent relative to the U.S. dollar. If the exchange rate had remained constant, the IPPI would have fallen 0.9 percent instead of decreasing 0.2 percent.

Over the 12-month period ending in December, the IPPI rose 1.1 percent, its largest year-over-year gain since November 2014.

The main reason for the increase in the IPPI was motorized and recreational vehicles (+12.6 percent), specifically higher year-over-year prices for passenger cars and light trucks (+13.7 percent), motor vehicle parts and motor vehicle engines (+8 percent) as well as aircraft (+19.4 percent).

Also contributing to the increase in the IPPI was higher prices for electrical, electronic, audiovisual, and telecommunication products (+6.8 percent), specifically electronic and electrical parts (+10.6 percent) and communication and audio and video equipment (+6 percent).

Lower year-over-year prices for energy and petroleum products (-14.3 percent) largely moderated the increase in the IPPI. Prices for diesel fuel (-21.5 percent), light fuel oils (-19.9 percent), heavy fuel oils (-33.3 percent) as well as motor gasoline (-4 percent) were the main reasons for the decline.

Also moderating the increase were lower year-over-year prices for primary ferrous metal products (-7.1 percent), led by lower prices for iron and steel basic shapes (-9.2 percent), and wire and other rolled and drawn steel products (-5.8 percent).

Raw Materials Price Index

The RMPI declined 5 percent in December, compared to November. Of the six major commodity groups, three were up and three were down. The main reason for the decline in the RMPI were lower prices for crude energy products (-11.9 percent), specifically conventional crude oil (-12.4 percent). The RMPI excluding crude energy products fell 0.4 percent.

Also contributing to the decline in the RMPI were lower prices for animals and animal products (-2 percent), primarily attributable to lower prices for hogs (-6 percent) and cattle and calves (-2.8 percent).

The RMPI declined 14.1 percent over the 12-month period ending in December.

Lower prices for crude energy products (-25.6 percent) were largely responsible for the decrease, specifically conventional crude oil (-26.5 percent). The RMPI excluding crude energy products declined 5.6 percent from the same month a year earlier.

Prices for animals and animal products (-9.2 percent) also contributed to the decline in the RMPI, specifically hogs (-22.9 percent) and cattle and calves (-13.6 percent).