DAILY NEWS Mar 4, 2014 5:20 AM - 0 comments

Industrial product pricing index sees third consecutive increase in January

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2014-03-04

Ottawa – Statistics Canada’s Industrial Product Price Index (IPPI) rose 1.4% in January 2014, led by higher prices for energy and petroleum products. The Raw Materials Price Index (RMPI) increased 2.6% as a result of higher prices for crude energy products.

The IPPI rose 1.4% in January, after advancing 0.6% in December. This was the third consecutive increase and the largest gain since February 2013. The gains were widespread, as 19 of 21 major commodity groups were up.

The growth of the IPPI was mainly attributable to higher prices for energy and petroleum products, which rose 2.3%. Light fuel oil (+4.2%) and diesel fuel (+3.7%) were primarily responsible for the increase in this commodity group. The IPPI excluding energy and petroleum products was up 1.2% in January.

Motorized and recreational vehicles also made a significant contribution to the increase in the IPPI, posting a 1.7% advance. Higher prices for passenger cars and light trucks (+1.6%) were the main reason for the increase in this commodity group. The advance of the motorized and recreational vehicles index was closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Some Canadian producers who export their products report their prices in US dollars. Consequently, the 2.8% decrease in the value of the Canadian dollar relative to the US dollar may have had the effect of increasing the IPPI. Without the measurable effect of the exchange rate, the index would have risen 0.7% instead of 1.4%.

Chemicals and chemical products (+2.9%) and primary non-ferrous metal products (+2.7%) also pushed the IPPI upward in January.

The increase in chemicals and chemical products was largely due to higher prices for petrochemicals (+6.6%) and, to a lesser extent, fertilizers, pesticides and other chemical products (+4.4%).

Higher prices for unwrought precious metals and precious metal alloys (+5.1%) led the increase in primary non-ferrous metal products. To a lesser extent, unwrought copper and copper alloys (+4.9%) also contributed to the advance of this commodity group.

Industrial Product Price Index, 12-month change

The IPPI grew 2.3% during the 12-month period ending in January, after rising 1.3% in December.

Compared with January 2013, the increase in the IPPI was mainly attributable to energy and petroleum products (+7.0%). The advance of this commodity group resulted primarily from higher prices for motor gasoline (+7.2%) and, to a lesser extent, light fuel oil (+11.5%) and diesel fuel (+10.0%). The IPPI excluding energy and petroleum products rose 1.3% on a year-over-year basis.

Motorized and recreational vehicles (+5.3%) also contributed to the year-over-year increase in the IPPI, as a result of higher prices for passenger cars and light trucks (+5.8%) and aircraft (+12.5%). Prices for motorized and recreational vehicles continued the year-over-year upward trend that began in July 2013.

To a lesser extent, chemicals and chemical products (+4.4%) and meat, fish, and dairy products (+2.1%) also contributed to the year-over-year advance of the IPPI.

Compared with January 2013, higher prices for petrochemicals (+9.5%) led the increase in chemicals and chemical products, while the meat, fish, and dairy products group was pushed upward by fresh and frozen pork (+10.8%).

Conversely, the advance of the IPPI over a 12-month period was moderated mostly by lower prices for primary non-ferrous metal products (-8.0%), specifically unwrought precious metals and precious metal alloys (-19.1%). On a year-over-year basis, primary non-ferrous metal products have been declining since December 2011.

Raw Materials Price Index, monthly change

The RMPI rose 2.6% in January, the second consecutive monthly advance and the largest increase since July 2013. Of the six major commodity groups, four were up and two were down.

Crude energy products (+3.7%) was the main contributor to the increase in the RMPI, largely because of higher prices for conventional crude oil (+3.6%). The January increase in crude oil prices was partly due to higher demand because of the cold weather in North America. The RMPI excluding crude energy products was up 1.5% in January.

To a lesser extent, metal ores, concentrates and scrap (+2.0%) also contributed to the advance of the RMPI in January, posting the largest gain since August 2013.

Animals and animal products (+2.2%) was also up compared with December, mainly as a result of higher prices for live animals (+3.6%), specifically cattle and calves (+7.0%).

Conversely, the increase in the RMPI was moderated primarily by crop products (-0.3%), which was led by lower prices for wheat (-5.7%) and canola (-3.9%).

Raw Materials Price Index, 12-month change

The RMPI edged up 0.1% during the 12-month period ending in January, after rising 2.1% the previous month.

Compared with January 2013, the advance of the RMPI was primarily due to higher prices for crude energy products (+5.0%), specifically conventional crude oil (+5.0%). On a year-over-year basis, the RMPI excluding crude energy products was down 4.9%.

To a lesser extent, animals and animal products (+2.3%) also contributed to the year-over-year increase in the RMPI, as a result of higher prices for live animals (+5.3%), specifically cattle and calves (+14.9%).

The advance of the RMPI over a 12-month period was moderated largely by lower prices for metal ores, concentrates and scrap (-9.3%) as well as crop products (-10.4%).



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