Industrial product and raw materials prices edge back down

OTTAWA — Manufactured goods prices out of the factory gate declined in August as prices for primary metal and petroleum products fell. Raw materials prices also fell in August (down 3.5% from July to August, following a 5.2% increase in July) — the result of lower prices for crude oil and non-ferrous metals, reports Stats Canada.

Prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), were down 0.5 percent in August, following a 1.8 percent rise in July.

Compared to August of last year, raw materials cost factories 9.7 percent more, down significantly from the year-over-year change of 19.0 percent in July.

Prices for primary metal products fell 1.6 percent compared to July, a sharp contrast to the 7.4 percent increase the previous month. Prices for copper and copper alloy products were down by 6.2 percent.

Petroleum and coal products prices decreased by 1.2 percent, a significant drop from the 5.4 percent increase in July.

Motor vehicles and other transport equipment were down 0.7 percent, mainly due to the stronger Canadian dollar. Meat, fish and dairy products decreased 1.2 percent as prices for fresh or frozen pork and beef declined.

Prices for lumber and other wood products, fruit, vegetable and feed products as well as electrical and communication products also decreased in August, according to StatsCan.

Impact of Exchange Rate:

The value of the Canadian dollar against the U.S. dollar was up 1.0 percent between July and August.

On a 12-month basis, the value of the Canadian dollar rose 7.7 percent against the U.S. dollar. If the impact of the exchange rate had been excluded, producer prices would have risen 5.6 percent between August 2005 and August, rather than their actual increase of 3.6 percent, reports Statscan.