Prices of products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), declined by 1.1% month over month in June 2022 and were 14.3% higher than in June 2021. Prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), edged down 0.1% on a monthly basis in June 2022 and increased 32.4% year over year.

Chart 1 
Prices for industrial products decrease

Industrial Product Price Index

In June, the IPPI declined 1.1% month over month and was 14.3% higher than in June 2021. This was the first monthly decline in the IPPI since August 2021 (-0.3%).

The decline in the IPPI was mostly driven by a 28.0% drop in softwood lumber prices. This was the third consecutive monthly decrease for softwood lumber and the largest monthly decline since July 2021 (-32.9%). Year over year, softwood lumber prices were down 37.2%, the largest decline on record since the series began in 1956. Even with the substantial drop, prices in June were nonetheless 80.3% higher than those in January 2020, prior to the onset of the COVID-19 pandemic.

Lower lumber prices were partially attributable to slowing demand for construction. The June price drop followed a 14.4% decline in monthly US housing starts in May, the largest monthly decrease since April 2020. The US residential construction market is the primary customer for Canadian softwood lumber. Rising interest rates and high costs for construction materials also played a role in driving prices and housing starts down.

Chart 2 
Softwood lumber (except tongue and groove and other edge worked lumber)

Prices for primary non-ferrous metal products dropped 4.7% in June, following an 8.0% decrease in the previous month. Lower prices were widespread among products in this group. Prices for aluminum products fell for a second straight month in June, with unwrought aluminum and aluminum alloys down 8.9% and basic and semi-finished products of aluminum and aluminum alloys down 8.1%. Prices for unwrought nickel and nickel alloys (-8.6%) and unwrought copper and copper alloys (-3.9%) also fell in June. Unwrought gold, silver, and platinum group metals and their alloys were down 1.7%. Lower prices for industrial metals were influenced by concerns of slowing global economic growth and tightening monetary policy. In June, the US Federal Reserve announced a 75 basis point interest rate hike, the third rate hike of the year. Demand concerns were also swayed by China’s zero-COVID policy.

Prices for energy and petroleum products increased 2.1% on a monthly basis. Prices for refined petroleum energy products prices rose 1.9%, a sixth consecutive monthly gain. Compared with June 2021, prices were up 88.7%. The monthly increase in refined petroleum energy products was mainly due to higher prices for finished motor gasoline (+5.9%), while jet fuel (-17.4%) dropped significantly after the prices reached a historical high in May 2022. Higher crude oil prices were partially responsible for the increase in refined petroleum energy products.

Raw Materials Price Index

In June, the RMPI edged down 0.1% on a monthly basis and increased 32.4% year over year.

Prices for metal ores, concentrates and scrap (-4.1%) posted a third consecutive monthly decrease. In this group, prices for waste and scrap of metal fell 9.5%, and nickel ores and concentrates dropped 4.1% on a monthly basis.

Prices for canola dropped 11.6% in June, the largest monthly decline since October 2008 (-13.9%). Year over year, prices were 28.4% higher compared with June 2021. Lower canola prices were partially influenced by market expectations that the domestic supply shortage will ease in the coming months, with weather conditions improving in western Canada. The November canola futures contract price fell approximately 17% from June 1 to June 30.

Higher prices for crude energy products (+3.5%) largely offset the monthly decrease in RMPI. The price of conventional crude oil rose 3.7% in June, and synthetic crude oil increased 4.7%. Excluding crude energy products, the RMPI declined 3.1%.

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