- The Industrial Product Price Index (IPPI) in Canada decreased by 0.8% in February but increased by 1.4% year-over-year.
- The Raw Materials Price Index (RMPI) decreased by 0.4% in February and was down 5.2% compared to February 2022.
- Prices of energy and petroleum products, primary non-ferrous metal products, and crude energy products declined, while prices of primary ferrous metal products, softwood lumber, and meat, fish, and dairy products increased.
The Industrial Product Price Index (IPPI) and Raw Materials Price Index (RMPI) both decreased in February 2023, according to the latest report by Statistics Canada. The IPPI decreased by 0.8% month over month but increased by 1.4% year over year. The RMPI, on the other hand, decreased by 0.4% on a monthly basis and declined by 5.2% year over year.
IPPI Highlights
- Prices for energy and petroleum products decreased by 5.8% on a monthly basis, mainly due to reduced demand for heating fuel and high inventories of diesel fuel in the US.
- Prices for primary non-ferrous metal products fell by 2.4% month over month, with all three types of precious metals declining. This was attributed to a stronger US dollar and rising US bond yields.
- Conversely, prices for primary ferrous metal products increased by 1.7% month over month, mainly due to higher prices for basic and semi-finished iron or steel products.
- Prices for softwood lumber rose by 7.4% month over month, mostly due to curtailed production in British Columbia and rising interest rates.
- Prices for meat, fish, and dairy products increased by 1.1%, with dairy and meat products contributing the most to the rise.
| Product Category | Price Change (MoM) | Reason for Change |
|---|---|---|
| Energy and petroleum products | -5.8% | Reduced demand for heating fuel and high inventories of diesel fuel in the US |
| Primary non-ferrous metal products | -2.4% | Stronger US dollar and rising US bond yields |
| Primary ferrous metal products | +1.7% | Higher prices for basic and semi-finished iron or steel products |
| Softwood lumber | +7.4% | Curtailed production in British Columbia and rising interest rates |
| Meat, fish and dairy products | +1.1% | Rising input costs such as feed and fuel |
RMPI Highlights
- Metal ores concentrate, and scrap decreased by 1.5%, mainly due to lower prices for gold, silver, and platinum group metal ores.
- Prices for crude energy products decreased by 0.3%, primarily because of lower natural gas prices.
- Prices for logs and other wood inputs fell by 3.8%, with softwood logs experiencing the largest decline (-4.1%).
- Conversely, prices for pulp and paper inputs rose by 2.0%, driven by higher prices for wood pulp (+2.2%) and newsprint (+2.8%).
| Product Category | Price Change (MoM) | Reason for Change |
|---|---|---|
| Metal ores, concentrates, and scrap | -1.5% | Lower prices for gold, silver, and platinum group metal ores |
| Crude energy products | -0.3% | Lower natural gas prices due to reduced demand for heating fuel in the US |
| Logs and other wood inputs | -3.8% | Softwood logs experiencing the largest decline (-4.1%) |
| Pulp and paper inputs | +2.0% | Higher prices for wood pulp (+2.2%) and newsprint (+2.8%) |
Analysis
The decline in the IPPI was mostly due to lower energy and petroleum product prices, with diesel and finished motor gasoline experiencing the largest declines. The decline in diesel prices was due to high inventories of distillate fuel oil in the US and warmer-than-expected weather in the US and Europe, which resulted in reduced demand for heating fuel. The decline in precious metal prices was due to a stronger US dollar and rising US bond yields.
The increase in the price of softwood lumber was a significant shift from the six consecutive months of decline. This was mostly due to curtailed production in British Columbia and rising interest rates. The increase in dairy and meat product prices was partly due to rising input costs such as feed and fuel. The increase in chicken prices was due to higher feed prices and tight supply, while the decrease in pork prices was due to higher supply and rising inventory levels.
The decline in the RMPI was mainly due to lower prices for metal ores, concentrates, and scrap, as well as crude energy products. The decrease in natural gas prices was due to lower demand for heating fuel in the US, while the decline in metal prices was mainly due to lower prices for gold, silver, and platinum group metal ores.
Conclusion
The IPPI and RMPI both decreased in February 2023, with energy and petroleum product prices and metal prices being the main contributors to the declines. However, prices for softwood lumber, dairy, meat, and chicken products increased, while prices for pork and some raw materials such as logs and wood inputs decreased. The report suggests that rising interest rates, supply constraints, and changes in demand due to weather conditions are some of the factors affecting prices.
Source: https://www.statcan.gc.ca/
