Canadian Industrial Prices Fall for Fourth Consecutive Month

The Industrial Product Price Index (IPPI) declined 0.2% in November, mainly as a result of lower prices for primary non-ferrous metal products. The Raw Materials Price Index (RMPI) fell 4.0%, led by lower prices for crude energy products.

Industrial Product Price Index, monthly change

The IPPI declined for the fourth consecutive month, falling 0.2% in November. Among the 21 major commodity groups, 11 were up, 8 were down and 2 were unchanged.

The decline in the IPPI in November was mainly attributable to lower prices for primary non-ferrous metal products (-3.5%), which posted their largest decline since April 2013. Unwrought precious metals and precious metal alloys (-5.0%), specifically unwrought silver and silver alloys (-7.1%) and unwrought gold and gold alloys (-5.2%), were the main reasons for the decline in prices for primary non-ferrous metals. To a lesser extent, lower prices for unwrought copper and copper alloys (-4.3%) and unwrought aluminum and aluminum alloys (-3.0%) also put downward pressure on the commodity group.

Meat, fish, and dairy products (-1.5%) recorded their largest decline since September 2008, primarily because of lower prices for fresh and frozen pork (-3.9%), fresh and frozen poultry of all types (-3.2%) as well as processed meat products, other meats and animal by-products (-2.2%). The drop in prices for fresh and frozen pork coincided with a 15.2% decline in the price for hogs in November.

Also contributing to the decline in the IPPI in November was energy and petroleum products (-0.4%). Lower prices for asphalt (except natural) and asphalt products (-4.6%), motor gasoline (-1.2%), heavy fuel oils (-3.0%), and jet fuel (-3.6%) were the main reasons for the decline, while higher prices for diesel fuel (+1.9%) and light fuel oils (+1.9%) moderated the drop. The IPPI excluding energy and petroleum products declined 0.2% in November.

Also contributing to the decline, but to a lesser extent, were lower prices for fruit, vegetables, feed, and other food products (-0.4%), specifically other animal feed (-2.5%) as well as flour and other grain mill products (-3.4%).

Largely moderating the decline in the IPPI in November were higher prices for motorized and recreational vehicles (+1.2%), specifically passenger cars and light trucks (+1.3%), motor vehicle engines and motor vehicle parts (+0.8%) and aircraft (+1.5%). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

via StatsCan

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza