According to the latest data from Statistics Canada, the prices of Canadian manufactured goods and raw materials saw significant decreases in September. The Industrial Product Price Index (IPPI) fell by 0.6% compared to August. The Raw Materials Price Index (RMPI) also dropped sharply, with a 3.1% decline over the same period.
The IPPI’s decline continued the trend in the industrial sector, which also experienced a 0.9% drop compared to September 2023. On the raw materials front, the RMPI saw an even steeper year-over-year decrease of 8.8%, reflecting broader concerns in the global economy.
The most substantial factor behind the monthly decrease in the IPPI was the sharp drop in energy and petroleum product prices, which fell by 6.5%. Prices for refined petroleum products like motor gasoline and diesel fuel were particularly impacted, with motor gasoline falling by 10.0% and diesel by 6.6%. These declines followed a similar trend in crude oil prices, which saw a significant dip of 8.2% in September.
This downturn in energy prices can be attributed to weak global demand projections, exacerbated by concerns over the broader economic outlook and declining future demand for petroleum products. The price drop was the second consecutive month of falling energy prices, as lower crude oil prices continue to ripple through the manufacturing sector.
The meat, fish, and dairy sector also saw a decline in prices, with a 1.1% decrease in September. Notably, the price of fresh and frozen pork plummeted by 3.1%. The drop in pork prices was driven by an oversupply in the market and subdued seasonal demand. According to Agriculture and Agri-Food Canada, hog slaughter rates increased significantly from August to September, particularly in both Canada and the United States, creating downward pressure on pork prices.
Amid the overall decline, certain sectors experienced price increases. Prices for primary non-ferrous metals, including unwrought gold, silver, and platinum, rose by 3.7% in September. This spike is largely attributed to ongoing geopolitical instability in the Middle East, which drove investor demand for precious metals. The US Federal Reserve and other central banks’ interest rate cuts also contributed to the price hikes in the metals market.
In the lumber sector, prices rose for the second month in a row, increasing by 1.2%. The rise was driven by a 3.2% increase in softwood lumber prices, which was linked to sawmill closures and reduced operations in British Columbia’s interior due to high operational costs. The impact of this supply constraint, combined with increasing prices for logs and bolts (+3.9%), bolstered the price of wood products.
The annual decrease of 0.9% in the IPPI was largely driven by the sharp decline in energy prices, particularly for diesel fuel, which saw a year-over-year drop of 27.6%. Finished motor gasoline also decreased significantly, by 18.8%. Other notable contributors included a 25.7% drop in the prices for grain and oilseed products, underscoring the broad pressure across energy and agricultural sectors.
Despite the downward trend, some sectors showed strength over the past year. Prices for unwrought metals, including gold, silver, and platinum group metals, jumped by 28.9%. Additionally, aluminum prices surged by 29.9%, driven by tight supplies and increased demand for the metal in industrial production.
The RMPI’s 3.1% monthly decline in September marked the sharpest drop since December 2023. The decrease was primarily driven by lower prices for crude energy products, which fell by 8.5%. Synthetic crude oil, a significant component of the energy mix, posted a 10.1% drop compared to August, driven by the same factors influencing conventional crude prices—namely concerns about future demand amid a weak global economy.
Prices for animals and animal products also contributed to the RMPI’s decline, with hog prices dropping by 7.4%. However, some materials, such as metal ores and concentrates, experienced price increases, with gold, silver, and platinum ores rising by 2.7% in September.
Year-over-year, the RMPI’s 8.8% decline reflected the largest annual drop since July 2023, with crude oil prices remaining a key contributor to the overall decrease. Conventional crude oil prices fell by 21.4%, while synthetic crude oil dropped even more sharply, down by 28.4%. Prices for canola, another major input for manufacturing, also dropped by 23.0% year over year, reflecting weaker demand in agricultural commodities.
However, as with the IPPI, some sectors saw price growth in raw materials. Gold, silver, and platinum group metal ores surged by 28.4%, while cattle and calves prices rose by 9.6%, providing some relief from the broader downward trend.
The data paints a mixed picture of our manufacturing landscape. On the one hand, declining prices in key energy and food sectors reflect broader economic concerns, particularly around demand for petroleum products and agricultural outputs. On the other hand, rising prices for metals and wood products indicate pockets of strength, driven by supply constraints and geopolitical factors.
As Canada looks ahead, the outlook for both manufactured products and raw materials will likely depend on global economic conditions, particularly the strength of recovery efforts in key markets and ongoing shifts in energy demand. How these trends evolve will be critical for manufacturers navigating an uncertain economic environment.