The Industrial Product Price Index (IPPI) rose 0.8% in March, mainly due to higher prices for motorized and recreational vehicles and primary non-ferrous metal products. The Raw Materials Price Index (RMPI) decreased 1.6%, primarily due to lower prices for crude energy products.
Industrial Product Price Index, monthly change
The IPPI (+0.8%) increased for a seventh consecutive month in March, following a 0.3% gain in February. This was the largest increase since June 2016. Of the 21 major commodity groups, 20 were up and 1 was down.
The growth in the IPPI was largely attributable to higher prices for motorized and recreational vehicles (+1.2%) and primary non-ferrous metal products (+2.0%).
Higher prices for passenger cars and light trucks (+1.2%), motor vehicle engines and motor vehicle parts (+1.1%) and aircraft (+2.2%) were mainly responsible for the increase in the motorized and recreational vehicles product group. Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.
The increase in the primary non-ferrous metal products group (+2.0%) was largely attributable to higher prices for unwrought precious metals and precious metal alloys (+2.0%) and unwrought aluminum and aluminum alloys (+5.5%).
Chemicals and chemical products (+1.2%) also contributed to the increase in the IPPI. Higher prices for petrochemicals (+4.1%) and chemical products, not elsewhere classified (+3.5%) were the main reasons for the growth in this commodity group.
Higher prices for pulp and paper products (+1.9%) also contributed to the increase in the IPPI, but to a lesser extent. The increase in this product group was mainly due to higher prices for wood pulp (+3.7%).
The growth in the IPPI was moderated by a decline in energy and petroleum products (-0.3%). Lower prices for lubricants and other petroleum refinery products (-3.9%), diesel fuel (-1.7%) and light fuel oils (-1.4%) were the main contributors to the decline. Higher prices for heavy fuel oils (+5.5%) and asphalt (other than natural) and asphalt products (+4.2%) moderated the decline in the energy and petroleum products group. The IPPI excluding energy and petroleum products rose 1.0%.
Some IPPI prices are reported in US dollars and 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 February to March, the Canadian dollar depreciated 2.1% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have advanced 0.3% instead of 0.8%.
Industrial Product Price Index, 12-month change
The IPPI rose 5.1% over the 12-month period ending in March, after increasing 3.6% in February. This was the largest year-over-year increase since November 2011 (+6.0%).
The year-over-year increase in the IPPI was mostly attributable to higher prices for energy and petroleum products (+20.0%). Motor gasoline (+16.1%), light fuel oil (+26.1%), diesel fuel (+20.0%) and heavy fuel oils (+56.9%) were the primary contributors to the rise in this commodity group. Year over year, the IPPI excluding energy and petroleum products was up 3.1%.
Compared with March 2016, primary non-ferrous metal products (+11.6%) also contributed to the increase in the IPPI, albeit to a lesser extent. Higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+35.2%) led the gain in this commodity group. Unwrought precious metals and precious metal alloys (+5.3%), unwrought aluminum and aluminum alloys (+17.1%) and unwrought copper and copper alloys (+20.0%) were also up compared to the same month a year earlier.
Year over year, chemicals and chemical products rose 7.5%, primarily due to higher prices for petrochemicals (+36.1%), particularly aromatic hydrocarbon gases (+40.9%) and liquefied refinery gases, and acyclic hydrocarbons not elsewhere classified (+49.8%). Prices for basic chemicals (+5.9%) and fertilizers, pesticides and other chemical products (+3.4%) also exerted upward pressure on this group.
Primary ferrous metal products (+10.1%) also rose compared with March 2016. The increase in this commodity group was mainly attributable to higher prices for wire and other rolled and drawn steel products (+23.9%) and iron and steel basic shapes (+7.2%).
Raw Materials Price Index, monthly change
The RMPI was down 1.6% in March, following a 1.3% increase in February. This was the largest decline in the RMPI since July 2016 (-2.7%). Of the six major commodity groups, three were down and three were up.
The decrease in the RMPI was primarily due to lower prices for crude energy products (-4.3%). The decline in this product group was mainly attributable to lower prices for conventional crude oil (-4.4%). This was the first decline in conventional crude oil since November 2016 (-7.4%). The RMPI excluding crude energy products rose 0.4%.
The decline in the RMPI was primarily moderated by higher prices for animals and animal products (+1.2%), specifically cattle and calves (+5.9%). Lower prices for hogs (-2.1%) moderated the increase in the animals and animal products group.
Prices for metal ores, concentrates and scrap also rose in March (+0.6%). The increase in this commodity group was mainly due to higher prices for waste and scrap of metal (+2.5%).
Raw Materials Price Index, 12-month change
The RMPI rose 16.6% in the 12-month period ending in March, following a 23.9% increase in February.
Compared with March 2016, the increase in the RMPI was largely due to higher prices for crude energy products (+34.4%), primarily conventional crude oil (+36.5%). The RMPI excluding crude energy products rose 6.5%.
Year over year, prices for metal ores, concentrates and scrap (+15.0%) also rose, following a 15.3% gain in February.
The logs, pulpwood, natural rubber and other forestry products group (+11.5%) also contributed to the year-over-year gain in the RMPI, to a lesser extent.
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Dean Popplewell
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