The Canadian Industrial Producer Price Index (IPPI) increased by 0.6% monthly in November 2024, following a 1.2% increase in the previous month. The fluctuations in the Canadian dollar versus the US dollar affected these changes, with the Canadian dollar depreciating by 1.6% against the US dollar from October to November. Had the October exchange rate been used, the price index would have increased by 0.3% instead of 0.6%.
Lumber and wood products: The most significant increase since March 2022
Lumber and other wood products prices increased by a significant 5.7%, the largest monthly increase since March 2022 (+7.5%). This increase was mainly due to an increase in softwood lumber prices, which rose by 12.2%, the largest monthly increase since January 2022 (+15.1%). This improvement in prices is due to strong demand for lumber in the first half of November 2024, combined with tight supplies that continue to impact the market.
Energy and Petroleum Products: Prices Rise on Increased Fuel Demand
Energy and petroleum products prices rose 1.1% in November 2024, driven by a 1.7% increase in refined petroleum products prices. Diesel fuel prices increased 3.3%, while light fuel oil prices rose 6.9%, driven by increased demand for heating fuels as winter set in. According to Natural Resources Canada, the average refining margin for diesel increased 13.0%.
Motor Vehicles and Recreational Vehicles: The Impact of the US Dollar on Prices
Motor vehicle and recreational vehicle prices increased 0.7% in November, driven in part by the appreciation of the US dollar against the Canadian dollar. The increase was particularly pronounced in several subgroups such as motor vehicle engines and parts (+0.8%), aircraft engines, aircraft parts and other aeronautical equipment (+1.6%), and aircraft (+1.7%).
Industrial Producer Price Index (IPPI): Metals and Commodities Prices Fall in November 2024
Some product groups saw notable month-on-month declines in November, partly offsetting the increase in the non-ferrous metals’ producer price index. Primary non-ferrous metal prices fell by 1.0% in November, after two consecutive months of increases. The decline came from a drop in unwrought metals in the gold, silver, platinum, and alloys groups (-1.6%), with unwrought silver and silver alloys falling by -2.8% and unwrought platinum group metals and alloys dropping by -3.2%. These price pressures were driven by a stronger US dollar and higher bond yields in November, while the shift towards electric vehicles could weigh on demand for platinum metals used in fossil fuel vehicles.
On the other hand, meat, fish and dairy prices fell by 1.1% from October to November, with fresh and frozen poultry of all types down -3.1% and fresh and frozen pork down -3.5%. This decline was partly due to weak seasonal demand in November. On the year-on-year side, the industrial producer price index rose by 2.2% in November, after a 1.1% increase in October.
The biggest factor in this year-on-year rise was the unwrought metals group of gold, silver, platinum and their alloys, which recorded a massive increase of 32.5%. Factors such as economic and geopolitical tensions also contributed to the rise in precious metal prices, along with higher prices for softwood (+21.9%) and unwrought aluminum and aluminum alloys (+27.4%). However, some other groups contributed to offsetting the increase in the PPI, with diesel fuel prices down -16.3%, finished gasoline for cars down -5.2%, and grains and oilseeds down -21.7%.
Impact of Canadian Industrial Product Price Index (IPPI) on Energy Prices
Crude energy product prices fell 2.2% in November 2024, after recording a 5.0% increase in October of the same year. This decrease was due to a 2.7% decline in conventional crude oil prices, in addition to a 1.8% decline in synthetic crude oil prices. This decline links to expectations of reduced geopolitical risks in the Middle East region and concerns about slowing oil demand growth in China, the world’s largest oil importer.
On the other hand, animal and animal product prices rose 1.4% from October to November, driven by a 7.0% increase in hog prices. Canadian hog exports, which witnessed growth between September and October, contributed to this increase, as strong demand for these exports helped lift prices.
Croup product prices rose 2.0% for the third consecutive month in November, with the increase mainly driven by higher green coffee bean prices, which recorded a 6.7% increase. The increase was due to weather effects in Brazil and Vietnam, the world’s largest coffee bean producers.
As for raw grains, their price index rose 2.0% year-on-year in November after a series of declines in the previous three months. As for precious metals, gold, silver and platinum ores were the largest contributors to the year-on-year increase of 36.9%. Cattle and calves’ prices also saw a 10.8% increase due to reduced supply in 2024.
Despite these increases, some subcategories recorded significant price declines compared to November 2023, such as conventional crude oil (-5.2%), industrial crude oil (-5.5%), canola oil (-12.8%) and lumber and nails (-10.9%).
Mixed effects on the index
These data show that there are multiple influences on the industrial product price index, including changes in raw material prices, fuel demand and fluctuations in the dollar exchange rate, reflecting the different challenges and opportunities in the Canadian industrial production market.
