Canada's industrial product price index increased 0.2 percent in July, according to Statistics Canada. The increase was mainly due to higher prices for primary non-ferrous metal products, largely moderated by a decline in prices for energy and petroleum products. The Raw Materials Price Index decreased 2.7 percent, as a result of higher prices for crude energy products.

The IPPI edged up 0.2 percent in July, after rising 0.7 percent in June. Of the 21 major commodity groups, 13 were up, 5 were down and 3 were unchanged.

The largest downward contribution to the IPPI in July came from energy and petroleum products (-3.5 percent), which posted their first decline since February 2016 (-4.1 percent). The fall was led by lower prices for motor gasoline (-6.4 percent) and, to a lesser extent, diesel fuel (-4.2 percent) and light fuel oils (-3.4 percent). The IPPI excluding energy and petroleum products rose 0.7 percent in July.

Largely moderating the downward pressure from energy and petroleum products were higher prices for primary non-ferrous metal products (+5.3 percent). This was the largest increase for this commodity group since September 2012, when prices rose 8.8 percent. The gain in July was mainly attributable to higher prices for unwrought precious metals and precious metal alloys (+8.6 percent), notably unwrought silver and silver alloys (+13.4 percent), other unwrought precious metals and precious metal alloys (+7.5 percent), and unwrought gold and gold alloys (+5.6 percent). Given the financial market volatility following Britain's decision to leave the European Union, prices for precious metals increased as investors pursued safe-haven assets such as gold and silver.

Primary ferrous metals (+1 percent) also rose in July, but to a much lesser extent than non-ferrous metals. The increase in primary ferrous metals was mostly attributable to higher prices for wire and other rolled and drawn steel products (+3 percent).

Also contributing to the increase in the IPPI were motorized and recreational vehicles (+0.8 percent). The gain was mainly due to higher prices for passenger cars and light trucks (+0.7 percent), motor vehicle engines and motor vehicle parts (+0.6 percent), and aircraft (+1.3 percent). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Meat, fish, and dairy products declined 0.6 percent in July, after increasing 1.5 percent in June, as prices for both fresh and frozen pork (-3 percent) and fresh and frozen beef and veal (-1.1 percent) fell.

Some IPPI prices are reported in U.S. 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 June to July, the Canadian dollar depreciated 1.2 percent relative to the U.S. dollar. If the exchange rate had remained constant, the IPPI would have declined 0.1 percent instead of rising 0.2 percent.

The IPPI declined 1.3 percent over the 12-month period ending in July, after falling 0.8 percent in June.

The year-over-year decrease in the IPPI was largely attributable to lower prices for energy and petroleum products (-13 percent). Motor gasoline (-17.1 percent), diesel fuel (-8.9 percent), light fuel oils (-6.1 percent) and heavy fuel oils (-14.9 percent) were the main reasons for the decline in prices for energy and petroleum products. The IPPI excluding energy and petroleum products rose 0.5 percent in July from the same month last year.

Lower prices for chemicals and chemical products (-5.5 percent), specifically petrochemicals (-18.7 percent) and ammonia and chemical fertilizers (-17.9 percent), also contributed to the year-over-year decline in the IPPI.

Moderating the year-over-year decline in the IPPI were higher prices for primary non-ferrous metal products (+5.4 percent). The main reason for the increase was unwrought precious metals and precious metal alloys (+19 percent), specifically unwrought silver and silver alloys (+30.7 percent) and unwrought gold and gold alloys (+20.2 percent). Slightly moderating the rise in this commodity group were lower prices for unwrought copper and copper alloys (-8.7 percent).

Raw Materials Price Index

The RMPI fell 2.7 percent in July, after gaining 2 percent in June. Of the six major commodity groups, three were up and three were down.

The decline in the RMPI was mainly attributable to lower prices for crude energy products (-8.4 percent), specifically conventional crude oil (-8.7 percent). Prices for natural gas rose 10.8 percent, posting their largest gain since March 2014. The increase was partly due to above-average temperatures in North America in July, resulting in higher demand for gas-fired electric power generation. The RMPI excluding crude energy products rose 1.3 percent.

Largely moderating this decline were higher prices for metal ores, concentrates and scrap (+5.1 percent). This was the largest increase in this commodity group since September 2012, when prices rose 9.8 percent.

Prices for animals and animal products fell 1.3 percent in July, as a result of lower prices for cattle and calves (-3.7 percent) and, to a lesser extent, hogs (-1.9 percent). This was the sixth consecutive monthly decline for the price of cattle and calves.

The RMPI declined 5.7 percent over the 12-month period ending in July.

Lower prices for crude energy products (-11.6 percent), specifically conventional crude oil (-11.6 percent), were largely responsible for the decrease in the RMPI. The RMPI excluding crude energy products declined 1.5 percent.

To a lesser extent, lower prices for animals and animal products (-7.3 percent) also contributed to the year-over-year decline in the RMPI. The decrease in this commodity group was primarily led by lower prices for cattle and calves (-25.4 percent).

A year-over-year gain in prices for metal ores, concentrates and scrap (+3.4 percent) helped moderate the decline in the RMPI.