FULL TEXT - Canada industrial, raw material prices
www.forbes.com Reuters, 01.30.03, 8:30 AM ET OTTAWA, Jan 30 (Reuters) - Statistics Canada issued the following data on Thursday:
Industrial product and raw materials price indexes December 2002
Manufacturers' prices, as measured by the Industrial Product Price Index (IPPI), fell in December (-0.4%) for the second month in a row. However, the IPPI remained high and prices were up 2.8% from December 2001, the highest year-over-year increase since May 2001. This rise reflects a much stronger performance in the second half of 2002 than in the same period of 2001.
On a monthly basis, lower prices for motor vehicles and other transport equipment (-1.0%), pulp and paper products (-1.1%), chemical products (-0.6%) and electrical and communications products (-0.6%) had a major impact. Higher prices for meat, fish and dairy products (+1.2%) and for fruit, vegetable and feed products (+0.3%) partly offset these monthly decreases.
Strong contributors to the year-over-year growth were petroleum and coal products (+24.5%) and primary metal products (+8.4%). Fruit, vegetable and feed products (+5.5%) and chemical products (+3.5%) also contributed to the annual growth in manufacturers' prices. However, lower prices for pulp and paper products (-2.5%) and for lumber and other wood products (-1.3%) dampened the increase.
From December 2001 to December 2002, petroleum and coal product prices rose 24.5%, the largest increase since December 2000. If petroleum and coal product prices had been excluded, the year-over-year increase would have been 1.6% instead of 2.8%.
Note to readers
The Industrial Product Price Index (IPPI) reflects the prices that producers in Canada receive as the goods leave the plant gate. It does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including the transportation, wholesale, and retail costs.
Canadian producers export many goods. They often quote their prices in foreign currencies, particularly for motor vehicles, pulp, paper, and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI.
The Raw Materials Price Index (RMPI) reflects the prices paid by Canadian manufacturers for key raw materials. Many of these prices are set in a world market. Unlike the IPPI, the RMPI includes goods not produced in Canada.
Manufacturers paid 17.6% more for their raw materials than they did in December 2001, after an 11.6% increase in November. Higher prices for mineral fuels and vegetable products, as well as for wood products and non-ferrous metals, were mainly responsible for this annual rise in the Raw Materials Price Index (RMPI). If mineral fuels had been excluded, the RMPI would have increased 7.8%.
On a monthly basis, raw materials prices were up 4.2% from November. Mineral fuels were responsible for most of the monthly rise. Prices for animal products were also higher in December than in November. Lower prices for vegetable products, non-ferrous metals and ferrous materials partly offset this monthly increase.
The IPPI (1997=100) stood at 108.2 in December, down from its revised level of 108.6 in November. The RMPI (1997=100) rose to 118.4 in December from its revised level of 113.6 in November. Monthly crude oil prices are up but prices for lumber products are unchanged
In the RMPI, crude oil prices were 12.8% higher in December than in November, mainly the result of lower inventories and strike activity in Venezuela. On a year-over-year basis, crude oil prices were up by 53.3%.
In the IPPI, lumber and other wood product prices were unchanged in December from November. Higher prices for softwood lumber were offset by lower prices for veneer and plywood. On a year-over-year basis, lumber and other wood products were down 1.3%. Impact of exchange rate pushes prices down
From November to December, the value of the US dollar weakened against the Canadian dollar, pushing down prices of commodities that are quoted in US dollars. As a result, the total IPPI excluding the effect of the exchange rate would have remained unchanged instead of declining 0.4%.
On a 12-month basis, the influence of the dollar had no impact. The IPPI excluding the effect of the exchange rate would have remained at an increase of 2.8% from December 2001 to December 2002. Finished goods continue to increase from a year ago
Rising prices for petroleum products, tobacco products, fruit, vegetable and feed products, meat, fish and dairy products, and electrical and communications products pushed prices for finished goods up 1.9% from December 2001. These increases were partly offset by lower prices for pulp and paper products and motor vehicles.
On a monthly basis, prices for finished goods were down 0.5% from November. Lower prices for motor vehicles, petroleum products and electrical and communication products were partly offset by higher prices for meat, fish and dairy products.
"Finished goods" are those generally purchased for the purpose of either consumption or investment. Most of the foods and feeds category ends up in the hands of consumers. Most capital goods are equipment and machinery generally bought by companies, government agencies or governments. Much of the remainder is bought by consumers.