Strong increase in petroleum prices drives up Canadian industrial prices in August.

• The Industrial Product Price Index (IPPI) increased by 1.3% month-on-month, primarily due to a significant 10.6% rise in refined petroleum prices.
• After seven months of decline, the chemicals industry experienced a 3.5% growth in August.
• Softwood lumber prices sharply declined by 6.0%, reversing the previous month's surge of 15.5%.

Industrial Price Fluctuations

In August 2023, the Industrial Product Price Index (IPPI) rose by 1.3% compared to the previous month, while experiencing a 0.5% decline year-over-year. The increase was primarily driven by a significant 10.6% surge in prices of refined petroleum energy products. This rise was influenced by higher diesel and finished motor gasoline prices, which can be attributed to the increase in West Texas Intermediate crude oil prices, rising from around $70 USD in July to $83 USD by the end of August.

Chemicals, Vehicles, and Food Products

Chemicals and chemical product prices saw a recovery, with a 3.5% monthly increase in August, ending a seven-month streak of decline. This increase was mainly driven by higher prices in the petrochemicals and fertilizers segments. The motorized and recreational vehicles sector also experienced a price increase of 0.5%, influenced by a 2.0% depreciation of the Canadian dollar against the US dollar, impacting price dynamics. Meat, fish, and dairy product prices rose by 1.2% in August, with significant increases observed in meat categories, driven by increased export demand and tighter cattle supply.

Lumber and Paper Trends

Softwood lumber prices declined by 6.0% in August, reversing the significant 15.5% increase seen in July. This decline can be attributed to a slowdown in construction activities and increased production in North America. On the other hand, prices of pulp and paper products increased by 1.8% on a monthly basis, with wood pulp leading the price hike.

Evolution of Raw Material

Prices The Raw Materials Price Index (RMPI) experienced a 3.0% monthly increase in August 2023, while showing a 4.3% decline on a year-over-year basis. Excluding crude energy products, the RMPI saw a modest 0.2% monthly increase and a 1.2% annual rise. The most significant movement within the RMPI in August was the 7.4% spike in crude energy product prices.