RTTNews - Canadian industrial product prices fell by much more than expected in the month of May, according to a report released by Statistics Canada on Tuesday, although the report also showed a notable increase in Canadian raw materials prices.
The report showed that industrial product prices fell 1.1 percent in May following a 0.5 percent decrease in April. Economists had been expecting a more modest decrease in industrial product prices of about 0.6 percent.
Statistics Canada said that the bigger than expected drop in industrial product prices reflected an appreciation of the Canadian dollar against its U.S. counterpart.
The drop in industrial product prices was widespread across the major product groups, with 14 out of 21 groups reporting decreases.
With some Canadian producers who export their products to the U.S. generally paid in prices set in U.S. dollars, a 6.4 percent increase in the value of the Canadian dollar versus the U.S. dollar had the effect of reducing the corresponding prices in Canadian dollars.
If the exchange rate used to convert these prices had remained unchanged, Statistics Canada said that industrial product prices would have risen 0.4 percent.
On an annual basis, industrial product prices were down 4.3 percent in May compared to a 2.2 percent decrease in April and a modest 0.1 percent drop in March.
As mentioned above, the report also showed that raw materials prices jumped 2.2 percent in May after edging down 0.3 percent in April. The increase was largely due to rising crude oil prices.
Statistics Canada noted that prices for mineral fuels increased 6.2 percent in May after falling 2.4 percent in April, reflecting a 7.3 percent in the price of crude oil.
Excluding the increase in mineral fuels prices, the statistical agency noted that raw materials fell 1.0 percent in May after two consecutive monthly increases.
Compared to the same month a year ago, raw materials prices were down 31.6 percent in May, comparable with the changes recorded since December 2008. The steep annual rate of decline reflected sharply lower mineral fuels prices as well as lower prices for non-ferrous metals.
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