In June 2024, the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) presented a mixed picture of stability and decline respectively, reflecting varied dynamics within Canada’s manufacturing and raw materials markets. Statistics Canada’s latest release provides detailed insights into the movements of these critical economic indicators.
The IPPI, which measures the price changes of products manufactured in Canada, showed no change month-over-month in June, maintaining the same level observed in May. Despite this monthly stability, the IPPI marked a notable year-over-year increase of 2.8%.
Key Contributors to Monthly Trends
June’s unchanged IPPI masked significant variations within specific product categories:
- Meat, Fish, and Dairy Products: This category saw a 2.4% rise, driven by a substantial increase in the prices of fresh and frozen beef and veal (up 5.6%) and fresh and frozen pork (up 4.6%). The surge was largely attributed to heightened seasonal demand and reduced supply, with cattle slaughter down significantly in both Canada and the United States compared to June 2023.
- Pulp and Paper Products: Prices rose by 1.7%, influenced by a 2.9% increase in wood pulp prices. Supply constraints, exacerbated by elevated shipping costs, have driven these prices upward for the third consecutive month.
Conversely, several product groups experienced price declines:
- Primary Non-Ferrous Metals: This category saw a 0.4% drop, ending a three-month streak of increases. Notably, unwrought nickel and nickel alloys plunged by 10.3%, the steepest fall since March 2023. The price correction reflects an ample supply from Asian producers.
- Energy and Petroleum Products: A 0.4% decline was recorded, with finished motor gasoline prices falling 3.5%. However, diesel prices increased by 3.3%, influenced by inventory dynamics and seasonal production shifts.
Year-Over-Year Highlights
On a yearly basis, the IPPI’s 2.8% increase was significantly influenced by:
- Precious Metals: Unwrought silver and silver alloys soared by 30.5%, and unwrought gold and gold alloys increased by 23.6%, driven by safe haven investment demand.
- Diesel Fuel and Copper: Diesel prices rose 9.7%, while unwrought copper and copper alloys were up 18.6%, the latter affected by supply concerns.
These increases were partially offset by declines in other areas, including finished motor gasoline (-5.0%) and unwrought nickel and nickel alloys (-14.9%).
Raw Materials Price Index
Monthly Decline, Yearly Increase
The RMPI, which tracks the prices of raw materials purchased by manufacturers, fell by 1.4% in June, following a 1.5% decrease in May. However, the RMPI rose by 7.5% year-over-year, continuing its upward trend for the fourth consecutive month.
Factors Driving Monthly Decline
The June decline in the RMPI was primarily driven by:
- Crude Energy Products: This category decreased by 1.2%, with synthetic crude oil prices down 3.1%. The reduction followed OPEC+’s announcement regarding the gradual phase-out of voluntary production cuts.
- Metal Ores, Concentrates, and Scrap: Prices dropped by 1.7%, influenced by significant declines in nickel ores and concentrates (-10.4%) and iron ores and concentrates (-9.4%). The latter was affected by rising stockpiles and weak demand in China.
- Crop Products: Prices fell by 1.9%, with canola prices down 5.6% due to improved production expectations and wheat prices decreasing by 3.5% amid pressured overseas markets.
Year-Over-Year Dynamics
The RMPI’s yearly increase was partly due to a base effect from declines in mid-2023. Significant upward contributors included:
- Conventional and Synthetic Crude Oil: Conventional crude oil prices increased by 13.9%, and synthetic crude oil by 12.2%.
- Precious Metal Ores: Gold, silver, and platinum group metal ores and concentrates rose by 24.4%.
Offsetting these gains, declines were observed in canola (-14.1%) and nickel ores and concentrates (-15.0%).