Canada. The Industrial Product Price Index (IPPI) increased 1.0%

The Industrial Product Price Index (IPPI) increased 1.0% and the Raw Materials Price Index (RMPI) rose 2.2% in November, mainly as a result of higher prices for petroleum and metals.

The IPPI rebounded with an increase of 1.0% in November, following two consecutive months of decline. The advance in industrial prices was the strongest since June 2008.

The IPPI was mainly pushed up by higher prices for petroleum and coal products (+4.9%) and primary metal products (+1.6%). Of the 21 major product groups, only 1 registered a price decline.

Excluding petroleum and coal prices, the IPPI advanced 0.5% in November, which was the first rise in this index since March 2009. Part of the increase in these products was due to the 0.4% depreciation of the Canadian dollar in relation to its US counterpart.

Some Canadian producers who export their products to the United States are generally paid in prices set in US dollars. Consequently, the relative strength of the US dollar in relation to the Canadian dollar had the effect of increasing the corresponding prices in Canadian dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 0.8% instead of 1.0%.

The change in the exchange rate had the effect of raising the prices of motor vehicles and other transport equipment (+0.4%).

Smaller contributions were also noted in all other products, especially fruit, vegetables and feed as well as chemical products.

The IPPI was pulled down primarily by lower prices for motor vehicles and other transport equipment (-8.1%), pulp and paper products (-10.6%) and chemical products (-6.7%). On the other hand, rising prices for petroleum and coal products (+3.5%) and primary metal products (+4.6%) moderated the decline of the IPPI.

Year over year, prices for products excluding petroleum and coal declined 3.6% in November, compared with a 4.7% drop in October.

Since November 2008, the Canadian dollar has appreciated 15.0% in relation to its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have risen 0.5% instead of declining 2.8%.

Raw Materials Price Index: Upward trend continues

The RMPI continued to rise, up 2.2% in November, after increasing 2.5% in October. Raw material prices continued their upward movement that began in January 2009, sustained by rising prices for mineral fuels and non-ferrous metals.

Mineral fuels prices rose 2.1% in November but the increase was less robust than in October, when they advanced 5.0%.

The 4.8% increase in prices for non-ferrous metals also contributed to the rise of the Raw Materials Price Index. Non-ferrous metals registered a fourth consecutive increase. Most categories of non-ferrous metals were up, except for nickel and radioactive concentrates. The demand for metals was bolstered by stronger economic activity.

Excluding mineral fuels, the RMPI showed an acceleration of growth with a 2.4% increase in November after edging up 0.1% in October. In November, five of the six major groups in this index showed an increase in prices.

From November 2008 to November 2009, raw material prices rebounded with a substantial 9.3% advance, the first increase after 13 consecutive declines. The increase in raw material prices was mainly attributable to mineral fuels (+16.1%) and non-ferrous metals (+28.8%). However, the year-over-year increase in raw material prices was tempered by declines in all the other major groups, especially animals and animal products.

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