DAILY NEWS Mar 7, 2014 11:30 AM - 0 comments

Energy and petroleum prices main reason for increase of industrial product price index in 2013

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Ottawa - The Industrial Product Price Index (IPPI) rose 0.5% in 2013, mainly because of higher prices for energy and petroleum products.

On an annual basis, it was the fourth consecutive increase for the IPPI. However, the advance in 2013 was smaller than in the three previous years, as the IPPI posted gains of 1.5% in 2010, 7.0% in 2011 and 1.0% in 2012.

Of the 21 major commodity groups, 17 posted higher prices compared with 2012.

A 2.1% increase in the prices of energy and petroleum products was the main reason for the overall advance of the IPPI in 2013. Price increases were observed for most petroleum products, notably motor gasoline (+2.1%) and diesel fuel (+4.0%).

The IPPI excluding energy and petroleum products edged up 0.1%. This advance resulted primarily from higher prices for motorized and recreational vehicles (+1.2%). The IPPI excluding energy and petroleum products has not declined on an annual basis since 2005.

The increase in prices for motorized and recreational vehicles was closely associated with the 3.0% depreciation of the Canadian dollar relative to the US currency in 2013.

Other products also contributed to the increase of the IPPI excluding energy and petroleum products, notably meat, fish, and dairy products (+2.5%). The advance of this commodity group was mostly attributable to higher prices for meat products (+3.6%), specifically fresh and frozen pork (+12.4%).

Conversely, the advance of the IPPI was moderated in large part by primary non-ferrous metal products (-7.2%), which registered a second consecutive decline on an annual basis. The decrease was mostly due to lower prices for unwrought precious metals and precious metal alloys (-12.9%), specifically unwrought silver and silver alloys, as well as unwrought gold and gold alloys.

Raw Materials Price Index

In 2013, the Raw Materials Price Index (RMPI) increased 0.9% compared with 2012, after falling 4.0% in 2012. Of the six major commodity groups, three were up, two were down, and one was unchanged.

The advance of the RMPI was mainly attributable to higher prices for crude energy products (+4.2%). While all of the subcomponents of this group posted higher prices compared with 2012, the increase was mostly due to conventional crude oil (+4.0%).

To a lesser extent, animals and animal products (+2.7%) also pushed the RMPI upward in 2013, primarily as a result of higher prices for live animals (+5.3%), specifically hogs (+8.1%) and cattle and calves (+4.6%). On an annual basis, prices for animals and animal products have been rising since 2007.

The logs, pulpwood, natural rubber and other forestry products group (+2.7%) was also up, as a result of higher prices for logs, pulpwood and other forestry products (+6.4%).

Conversely, the increase of the RMPI was moderated mainly by metal ores, concentrates and scrap (-7.9%), which posted a second consecutive annual decline.

The index is compiled by Statistics Canada.

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