Prices of products manufactured in Canada rose 0.7% in December
As measured by the Industrial Product Price Index (IPPI), prices of products manufactured in Canada rose 0.7% monthly in December and were 16.1% higher than in December 2020. Prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), fell 2.9% month over month in December, but increased 29.0% year over year.
The IPPI reflects the prices that producers in Canada receive as goods leave the plant gate. The IPPI does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all costs between the time a good leaves the plant and the time the final user takes possession of the good. This includes transportation, wholesale and retail costs.
Canadian producers export many goods. They often indicate their prices in foreign currencies, especially in US dollars, and these prices are then converted into Canadian dollars. This is particularly the case for motor vehicles, pulp and paper products, and wood products. Therefore, fluctuations in the value of the Canadian dollar against its US counterpart affect the IPPI.
Prices for lumber and other wood products rose 19.2% in December, driven up mainly by a 32.8% increase in prices for softwood lumber. This was the third consecutive month-over-month gain and the strongest monthly increase for softwood lumber. On a year-over-year basis, prices were up 25.1%. Disruptions in wood supply due to record precipitation in Canada in November and labour shortages in the United States created an imbalance in wood supply and demand.