The Industrial Product Price Index (IPPI) declined 1.0% in June, mainly due to lower prices for energy and petroleum products. The Raw Materials Price Index (RMPI) declined 3.7%, primarily due to lower prices for crude energy products.
Industrial Product Price Index, monthly change
The IPPI fell 1.0% in June, after edging up 0.1% in the previous month. Of the 21 major commodity groups, 16 were down and 5 were up.
The decrease in the IPPI was mainly due to lower prices for energy and petroleum products (-4.1%), which experienced their largest decline since February 2016. The decline in this product group was mainly due to lower prices for motor gasoline (-4.0%), diesel fuel (-6.1%) and light fuel oil (-5.6%). The IPPI excluding energy and petroleum products was down 0.7%.
Motorized and recreational vehicles (-1.5%) also contributed significantly to the decline in the IPPI in June. Lower prices for passenger cars and light trucks (-1.6%) and, to a lesser extent, motor vehicle engines and motor vehicle parts (-1.1%) and aircraft (-2.1%) were the main contributors to the decline in this product group. Lower prices for motorized and recreational vehicles were closely linked to the appreciation of the Canadian dollar relative to the US dollar.
Primary non-ferrous metal products (-2.2%) were down for a second consecutive month in June, mainly due to lower prices for unwrought precious metals and precious metal alloys (-2.1%), unwrought aluminum and aluminum alloys (-4.5%), as well as other unwrought non-ferrous metals and non-ferrous metal alloys (-4.1%).
Prices for chemical products (-1.6%) posted their largest decline since February 2016. This decrease was mainly attributable to lower prices for petrochemicals (-6.9%) and, to a lesser extent, plastic resins (-1.8%).
Conversely, the decline in the IPPI was primarily moderated by the meat, fish and dairy products group (+1.7%), which posted a sixth consecutive monthly increase. This increase was mainly due to higher prices for fresh and frozen pork (+9.2%), while prices for fresh and frozen beef and veal decreased 1.5%.
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 May to June, the Canadian dollar appreciated 2.3% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have decreased 0.5% instead of 1.0%.
Industrial Product Price Index, 12-month change
The IPPI rose 3.3% over the 12-month period ending in June, after posting a 5.2% increase in May.
Primary non-ferrous metal products (+9.9%) were the largest contributor to the year-over-year growth in the IPPI. Higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+26.8%), unwrought copper and copper alloys (+26.8%), as well as unwrought aluminum and aluminum alloys (+15.4%) were mainly responsible for the increase in this product group.
Prices for chemical products (+5.8%), particularly petrochemicals (+13.3%), ammonia and chemical fertilizers (+20.8%), and chemicals not elsewhere classified (+8.2%) also contributed significantly to the year-over-year increase in the IPPI.
Prices for meat, fish and dairy products (+4.7%) and motorized and recreational vehicles (+2.1%) also contributed to the year-over-year growth in the IPPI.
Prices for fresh and frozen pork (+9.2%) and fresh and frozen beef and veal (+7.4%) were the main contributors to the year-over-year rise in the meat, fish and fish products group. Prices for motor vehicle engines and motor vehicle parts (+2.9%), passenger cars and light trucks (+1.5%) and aircraft (+4.4%) were the main contributors to the increase in motorized and recreational vehicles.
The decrease in the RMPI was primarily due to lower prices for crude energy products (-9.3%), particularly conventional crude oil (-9.6%). This was the largest decline in crude energy products since January 2016, when prices fell 11.7%. The RMPI excluding crude energy products edged up 0.1%.
To a lesser extent, prices for metal ores, concentrates and scrap (-0.9%) also contributed to the decline in the RMPI.
The decline in the RMPI was moderated by higher prices for animals and animal products (+1.8%), led by prices for live animals (+2.7%), particularly hogs (+11.3%). Lower prices for cattle and calves (-2.1%) moderated the increase in the animals and animal products group.
Raw Materials Price Index, 12-month change
The RMPI increased 2.2% in the 12-month period ending in June, after posting a 8.4% increase in May.
The gain in the RMPI compared with June 2016 was mainly attributable to higher prices for metal ores, concentrates and scrap (+12.7%), which have been increasing year-over-year since July 2016.
Animals and animal products (+5.2%) also contributed to the year-over-year increase in the RMPI. Higher prices for live animals (+5.1%), particularly cattle and calves (+9.6%), were the main contributors to the rise in this product group. Prices for fish, shellfish and other fishery products (+13.7%), as well as other animal products (+2.9%), also contributed to the growth in animals and animal products.
Year over year, the increase in the RMPI was primarily moderated by prices for crude energy products (-3.2%), particularly conventional crude oil (-3.6%). This was the first year-over-year decline in conventional crude oil since September 2016. The RMPI excluding crude energy products was up 5.9%.
Crop products (-3.5%) also declined compared with June 2016. Lower prices for oilseeds (excluding canola) (-15.2%), as well as other miscellaneous crop products (-7.8%) were the main contributors to the decline.
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Dean Popplewell
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