The latest data from Statistics Canada reveals a mixed picture for industrial product and raw material prices in March 2024. The Industrial Product Price Index (IPPI) increased by 0.8% month-over-month, while the Raw Materials Price Index (RMPI) saw a significant monthly rise of 4.7%. However, on a yearly basis, both indexes experienced declines, with IPPI down by 0.5% and RMPI up by just 0.8%.
The IPPI registered a 0.8% increase in March, following a 1.1% rise in February. Notably, prices for primary non-ferrous metal products surged by 4.9%, marking the largest monthly increase since December 2022. This rise was driven by strong gains in unwrought silver, gold, nickel, and copper prices, bolstered by expectations of interest rate cuts by the U.S. Federal Reserve.
In the agricultural sector, prices for meat, fish, and dairy products rebounded with a 3.1% increase after four consecutive months of declines. This uptick was fueled by higher prices for beef, veal, and chicken due to tight supply conditions and increased seasonal demand.
Lumber and wood products continued their upward trend for the third consecutive month, rising by 3.6%. Softwood lumber prices, in particular, surged by 7.8%, reflecting strong demand in the homebuilding sector amid optimistic expectations of future interest rate cuts.
On a year-over-year basis, the IPPI declined by 0.5%, marking the sixth consecutive annual decrease. The decline was largely attributed to lower prices for unwrought nickel, diesel fuel, wood pulp, and grain and oilseed products. However, prices for precious metals, softwood lumber, and beef and veal showed year-over-year increases.
The RMPI saw a substantial monthly increase of 4.7%, the largest since March 2022. Crude energy products led the surge with an 8.1% rise, driven by increases in conventional and synthetic crude oil prices. Metal ores and scrap also rose by 4.3%, mainly due to higher prices for gold, silver, platinum group metals, and nickel ores.
Despite the monthly gain, the RMPI was up by just 0.8% year-over-year, marking the first annual increase since September 2023. Excluding crude energy products, the RMPI fell by 0.8%. Notable contributors to the yearly increase included conventional crude oil, gold, silver, platinum group metal ores, and cattle and calves. On the flip side, nickel ores and canola were major detractors from the index.
The March 2024 IPPI and RMPI data paints a complex picture of the Canadian industrial and raw material markets. While monthly increases suggest short-term price pressures, particularly in metals and energy sectors, the yearly declines highlight ongoing challenges faced by manufacturers and producers. Factors such as global supply constraints, interest rate expectations, and seasonal demand fluctuations continue to influence price dynamics in these sectors.
As we move forward, it will be crucial to monitor these trends closely to understand their implications for the Canadian economy, particularly in light of evolving global economic conditions and policy shifts.