Surging Petroleum Powers Canadian Industrial Price Jump in August

Highlights

• IPPI climbs 1.3% MoM, driven by a 10.6% spike in refined petroleum.
• Chemicals break seven-month slump with a 3.5% gain in August.
• Softwood lumber prices dive 6.0%, reversing July’s 15.5% surge.

Industrial Price Swings

August 2023 witnessed a 1.3% month-over-month rise in the Industrial Product Price Index (IPPI), contrasting a year-over-year dip of 0.5%. Leading this monthly increase was the surging refined petroleum energy products category, which saw a jump by 10.6%. This uptick was influenced by gains in diesel and finished motor gasoline prices. The dominant factor behind these price changes seems to be the rise in West Texas Intermediate crude oil, which increased from around $70 USD in July to $83 USD by August’s close.

Chemicals, Vehicles, and Foodstuffs

Chemicals and chemical product prices experienced a recovery with a 3.5% monthly increase in August, breaking a streak of seven months. A key driver behind this rise was the upsurge in petrochemicals and fertilizers. Moreover, the motorized and recreational vehicles sector registered a 0.5% price increase due to a 2.0% depreciation of the Canadian dollar against the US dollar, affecting the price dynamics. Meat, fish, and dairy product prices climbed 1.2% in August, with notable increases across meat categories—fuelled by surging export demand and tightened supply for cattle.

Lumber and Paper Trends

Softwood lumber faced a 6.0% decrease in August, following a significant 15.5% upswing in July, reflecting a cooling off in construction activities and a revival in North American production. Contrarily, the pulp and paper products sector saw prices ascend by 1.8% on a monthly scale, with wood pulp leading this hike.

Raw Material Price Evolution

August 2023 brought a 3.0% monthly surge in the Raw Materials Price Index (RMPI), while year-over-year figures showed a 4.3% decline. When crude energy products are set aside, RMPI experienced a modest 0.2% monthly increase and a 1.2% annual uptick. This month, the most striking movement within the RMPI was the 7.4% spike in crude energy products.