Canada's industrial product price index increased 0.7 percent in October, according to Statistics Canada. Of the 21 major commodity groups, 13 were up, 4 were down, and 4 were unchanged.

The main reason for the increase in October was higher prices for energy and petroleum products (+5 percent), which recorded its largest gain since May 2016 (+6.6 percent). The increase was led by higher prices for motor gasoline (+3.8 percent), diesel fuel (+8.2 percent) and light fuel oils (+10.1 percent). The IPPI excluding energy and petroleum products edged up 0.1 percent in October.

Also contributing to the increase in the IPPI was motorized and recreational vehicles (+0.7 percent). Higher prices for passenger cars and light trucks (+0.7 percent), motor vehicle engines and motor vehicle parts (+0.5 percent) and aircraft (+1.1 percent) were the main reasons for the increase in this commodity group. Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Chemicals and chemical products (+1 percent) rose for a second consecutive month, led by higher prices for petrochemicals (+5.9 percent). One of the main costs of production for petrochemicals is crude oil, which put upward pressure on these commodities in October.

Moderating the increase in the IPPI in October were lower prices for primary non-ferrous metal products (-1.4 percent). The decline was mainly due to prices for unwrought precious metals and precious metal alloys (-5.2 percent), specifically unwrought silver and silver alloys (-7.4 percent), unwrought gold and gold alloys (-3.8 percent) as well as other unwrought precious metals and precious metal alloys (-4.5 percent). The decline in primary non-ferrous metals was slightly moderated by higher prices for unwrought aluminum and aluminum alloys (+3.3 percent) and other unwrought non-ferrous metals and non-ferrous metal alloys (+2.7 percent).

Also putting downward pressure on the IPPI, albeit to a much lesser extent, was meat, fish, and dairy products (-0.2 percent). The decline was mainly due to prices for fresh and frozen beef and veal (-2.4 percent), while prices for fresh and frozen pork rose 0.5 percent.

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 September to October, the Canadian dollar depreciated 1.1 percent relative to the US dollar. If the exchange rate had remained constant, the IPPI would have increased 0.5 percent instead of rising 0.7 percent.

The IPPI rose 0.8 percent in October, its first year-over-year increase since January 2016 (+1.8 percent).

The year-over-year advance in the IPPI was largely attributable to higher prices for primary non-ferrous metal products (+5.1 percent), led by unwrought precious metals and precious metal alloys (+9.2 percent) and other unwrought non-ferrous metals and non-ferrous metal alloys (+17.4 percent). Prices for unwrought copper and copper alloys (-8.3 percent) helped moderate the gain in this commodity group.

Higher year-over-year prices for motorized and recreational vehicles (+0.6 percent) and fabricated metal products and construction materials (+3.5 percent) also contributed to year-over-year increase in the IPPI. Passenger cars and light trucks (+0.9 percent) and aircraft (+2.1 percent) were the main reasons for the increase in motorized and recreational vehicles.

Moderating the increase in the IPPI were lower prices for meat, fish, and dairy products (-3 percent). The decline was mainly due to lower prices for fresh and frozen beef and veal (-13.1 percent) and, to a lesser extent, fresh and frozen pork (-4.2 percent). Moderating the year-over-year decline in meat, fish, and dairy products were higher prices for dairy products (+2.7 percent), specifically cheese and cheese products (+4.1) and fluid milk and processed milk products (+3 percent).

Raw Materials Price Index

The RMPI increased by 3.3 percent in October following no change in September. Of the six major commodity groups, four were up and two were down.

The increase in the RMPI was mainly due to higher prices for crude energy products (+9.6 percent), specifically conventional crude oil (+9.9 percent). The rise in crude oil prices in October was partly attributable to an agreement that took place on September 28 among OPEC member countries to reduce crude oil production going forward. The RMPI excluding crude energy products fell 1.1 percent.

Moderating the increase was lower prices for animals and animal products (-3.4 percent), specifically hogs (-15.3 percent). Since June 2016, the price for hogs has fallen 35.3 percent.

Prices for metal ores, concentrates and scrap (-0.6 percent) also fell in October.

The RMPI rose 1.5 percent in October compared with the same month last year. The increase was led by higher prices for crude energy products (+8 percent), specifically conventional crude oil (+8.3 percent). Also contributing to the increase were higher prices for metal ores, concentrates and scrap (+4 percent).

Moderating the gain in the RMPI were lower year-over-year prices for animals and animal products (-12 percent). The year-over-year decline in animals and animal products was mainly due to lower prices for cattle and calves (-23.4 percent) and hogs (-29.8 percent).