Canada's industrial product price index increased 1.1 percent in May, according to Statistics Canada. The increase was mainly due to higher prices for energy and petroleum products. The Raw Materials Price Index (RMPI) rose 6.7 percent, led by a gain in prices for crude energy products.
The IPPI rose 1.1 percent in May, following a 0.5 percent decline in April. This was the largest monthly gain since February 2015, when prices grew 1.9 percent. Of the 21 major commodity groups, 16 were up, 2 were down, and 3 were unchanged.
The increase in the IPPI in May was mainly attributable to higher prices for energy and petroleum products (+6.3 percent), specifically motor gasoline (+6.4 percent), diesel fuel (+7.8 percent) and light fuel oils (+8.2 percent). Unplanned domestic and international supply disruptions exerted upward pressure on the price of conventional crude oil, resulting in higher prices for refined petroleum products. The IPPI excluding energy and petroleum products rose 0.5 percent in May.
Also contributing to the increase in the IPPI were higher prices for primary non-ferrous metal products (+1.6 percent), led by unwrought precious metals and precious metal alloys (+3.1 percent), and unwrought aluminum and aluminum alloys (+2.2 percent).
Prices for motorized and recreational vehicles (+0.7 percent) increased in May, led by gains in passenger cars and light trucks (+0.6 percent), motor vehicle engines and motor vehicle parts (+0.5 percent), and aircraft (+1.1 percent). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.
Prices for chemicals and chemical products (+1.3 percent) posted their largest increase since July 2015. Higher prices for petrochemicals (+6.9 percent) and, to a lesser extent, other basic inorganic chemicals (+2.5 percent) contributed to the rise.
Higher prices for fruit, vegetables, feed and other food products (+0.6 percent) also contributed to the increase in the IPPI. The gain was led by other animal feed (+3.6 percent) and, to a lesser extent, flour mixes, dough and dry pasta (+1.5 percent), and cookies, crackers, and baked sweet goods (+0.2 percent).
Slightly moderating the rise in the IPPI were lower prices for meat, fish, and dairy products (-0.7 percent), specifically fresh and frozen beef and veal (-4 percent), while higher prices for fresh and frozen pork (+1.5 percent) partly offset the decline.
Some IPPI prices are reported in US dollars and are converted to Canadian dollars using the average monthly exchange rate. Consequently, any change in the value of the Canadian dollar relative to the US dollar will affect the level of the index. From April to May, the Canadian dollar depreciated 1 percent relative to the US dollar. If the exchange rate had remained constant, the IPPI would have increased 0.9 percent instead of rising 1.1 percent.
The IPPI declined 1.1 percent over the 12-month period ending in May, after falling 1.6 percent in April.
Year over year, the decrease in the IPPI was mainly attributable to lower prices for energy and petroleum products (-12.7 percent). Motor gasoline (-8.7 percent), light fuel oils (-14.6 percent), diesel fuel (-15.1 percent) and heavy fuel oils (-30.2 percent) contributed to the decline in prices for energy and petroleum products. The IPPI excluding energy and petroleum products increased 0.8 percent from the same month last year.
Lower prices for primary ferrous metal products (-9.5 percent) and primary non-ferrous metal products (-3.3 percent) also contributed to the year-over-year decrease in the IPPI.
Lower prices for iron and steel basic shapes (-13.4 percent), and iron and steel pipes and tubes (except castings) (-14.3 percent) were the main reasons for the decline in primary ferrous metal products. The decrease in primary non-ferrous metal products was led by unwrought copper and copper alloys (-20.8 percent), unwrought aluminum and aluminum alloys (-8.3 percent), and other unwrought non-ferrous metals and non-ferrous metal alloys (-9 percent). Moderating the fall in primary non-ferrous metal products were higher prices for unwrought precious metals and precious metal alloys (+6.4 percent).
Also contributing to the year-over-year decline in the IPPI were lower prices for chemicals and chemical products (-2 percent), specifically petrochemicals (-10 percent) and plastic resins (-6.8 percent).
Moderating the year-over-year decrease in the IPPI were higher prices for motorized and recreational vehicles (+4 percent), specifically passenger cars and light trucks (+4.4 percent) and aircraft (+6.8 percent).
Raw Materials Price Index
The RMPI rose 6.7 percent in May, after increasing 0.7 percent in April. All of the six major commodity groups posted increases.
The gain in the RMPI was mainly attributable to higher prices for crude energy products (+15.7 percent), specifically conventional crude oil (+16.9 percent). The RMPI excluding crude energy products increased 1.4 percent in May.
Prices for animals and animal products rose 2.5 percent in May, mainly due to higher prices for hogs (+13.7 percent), while lower prices for cattle and calves (-1.2 percent) moderated the gain.
Crop products (+1.4 percent) also increased in May, led by higher prices for grains (except wheat) (+1.8 percent), other miscellaneous crop products (+2.9 percent) and canola (including rapeseed) (+4.9 percent).
The RMPI declined 10.6 percent over the 12-month period ending in May.
Lower prices for crude energy products (-17.7 percent), specifically conventional crude oil (-18.1 percent), were largely responsible for the decrease. The RMPI excluding crude energy products fell 5 percent.
To a lesser extent, lower prices for animals and animal products (-7.8 percent) also contributed to the year-over-year decline in the RMPI. The decrease in this commodity group was led by lower prices for cattle and calves (-24.4 percent).
