Canadian industrial product prices drop in December while raw material prices rise

Thursday, 31 January 2019 00:59:48 (GMT+3)   |   San Diego
       

According to Statistics Canada, prices for products sold by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), fell 0.7 percent in December, mainly due to lower prices for energy and petroleum products. Prices for raw materials purchased by Canadian manufacturers, as measured by the Raw Materials Price Index (RMPI), rose 3.8 percent, driven primarily by prices for crude energy products.

The IPPI fell 0.7 percent in December, following a 0.8 percent decrease in November. Of the 21 major commodity groups, 3 were down, 14 were up and 4 were unchanged.

The decline in the IPPI was mainly due to lower prices for energy and petroleum products, which fell 7.4 percent, following a 6.8 percent decrease in November. This was the largest decline for this commodity group since January 2016 (-7.5 percent). Prices for nearly all energy and petroleum products were down in December, notably motor gasoline (-7.4 percent), light fuel oils (-9.6 percent) and diesel fuel (-8.5 percent). The IPPI excluding energy and petroleum products rose 0.4 percent.

On the other hand, the decrease in the IPPI was moderated primarily by higher prices for motorized and recreational vehicles (+0.8 percent) and primary non-ferrous metal products (+1.6 percent).

Prices for motor vehicle engines and motor vehicle parts (+1.0 percent), aircraft (+2.0 percent), as well as aircraft engines, aircraft parts and other aerospace equipment (+1.9 percent), were mainly responsible for the increase in motorized and recreational vehicles. Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Year over year, the IPPI rose 2.2 percent in December, after increasing 2.8 percent in November. Primary ferrous metal products (+14.2 percent) also contributed significantly to the year-over-year increase in the IPPI. Iron and steel basic shapes (+18.8 percent) and wire and other rolled and drawn steel products (+19.2 percent) were primarily responsible for this gain.

To a lesser extent, fabricated metal products and construction materials (+8.1 percent) also contributed to the increase in the IPPI compared with December 2017, mainly due to higher prices for other architectural metal products (+18.6 percent) and forged and stamped metal products (+8.4 percent).

The year-over-year growth in the IPPI in December was moderated primarily by lower prices for energy and petroleum products (-3.4 percent), particularly motor gasoline (-10.1 percent) and light fuel oils (-6.3 percent).

The RMPI rose 3.8 percent in December, after four consecutive monthly decreases. Of the six major commodity groups, four were up and two were down.

The increase in the RMPI was primarily driven by higher prices for crude energy products, which rose 10.4 percent, after falling 24.9 percent in November. Conventional crude oil (+10.8 percent) was the main contributor to the growth of this group. Crude oil prices were driven up by Alberta's decision to reduce its oil production starting in January 2019. The RMPI excluding crude energy products decreased by 0.4 percent.

Year over year, the RMPI was down 5.8 percent in December, following a 10.0 percent decline in November.

Compared with December 2017, the decrease in the RMPI was mainly attributable to lower prices for crude energy products (-11.0 percent). Conventional crude oil (-11.5 percent) was the only contributor to this decline. The RMPI excluding crude energy products fell 1.6 percent.

Prices for metal ores, concentrates and scrap (-2.7 percent) also fell compared with December 2017.


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