In February, the Industrial Product Price Index (IPPI) increased 0.7% and the Raw Materials Price Index (RMPI) rose 1.8%. Both indexes have been on an upward trend since mid-2010. The IPPI was up 0.7% in February, following increases of 0.8% in December and 0.4% in January. The advance in February was led mainly by petroleum and coal products (+3.0%) and primary metal products (+2.5%). Chemical products (+1.0%) and meat, fish and dairy products (+1.4%) had more modest contributions. Higher prices for petroleum and coal products in February were in part influenced by reduced production.
In February, prices for primary metal products continued their growth, supported by higher demand and limited production. All primary metal products sub-groups were up, particularly "other non-ferrous metals" (+4.7%), nickel products (+8.7%) and copper and copper alloys (+2.1%). The other non-ferrous metals group was pushed upward largely by precious metal basic manufactured products (+11.7%) and by silver and platinum (+6.9%).
The IPPI advance was moderated slightly by a 0.4% decline in prices for motor vehicles and other transportation equipment. The decrease was due mostly to a 0.6% appreciation in the Canadian dollar relative to the US dollar. Some Canadian producers who export their products to the United States are generally paid on the basis of prices set in US dollars. Consequently, the strength of the Canadian dollar in relation to the US dollar had the effect of reducing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have risen 0.9% instead of 0.7%.
In February, excluding petroleum and coal products, the IPPI would have increased by 0.5%. The IPPI rose 3.4% in February compared with the same month a year earlier, after advancing 3.0% in December and 2.9% in January. The gain in February was the largest since the acceleration of the index that began in September 2010.
In the past 12 months, the IPPI advance was driven mainly by higher prices for petroleum and coal products (+16.0%), primary metal products (+15.6%) and, to a lesser extent, fruits, vegetables, feeds and other food products (+5.0%).
In February, the 7.0% year-over-year increase in the value of the Canadian dollar relative to the US dollar dampened the IPPI advance. Without the impact of the exchange rate, the IPPI would have risen 4.9% instead of 3.4%.
Prices for motor vehicles and other transportation equipment, which are particularly sensitive to the exchange rate, fell 3.5% in February compared with the same month a year earlier, continuing the downward movement that started in October 2009. Year over year, if petroleum and coal prices were excluded, the IPPI would have increased 1.8% in February, the 10th consecutive year-over-year gain, and a growth rate comparable with the rates observed in the previous four months.