March 22, 2022
The Industrial Product Price Index rose 3.1% month over month in February and 16.4% year over year. The Raw Materials Price Index rose 6.0% month over month in February and 29.8% year over year.
Industrial Product Price Index
In February 2022, the Industrial Product Price Index rose 3.1% month over month and 16.4% year over year. This was the sixth consecutive monthly increase, and the largest monthly gain in more than 42 years, since January 1980 (+3.8%).
In February, prices for energy and petroleum products rose 8.5% month over month and 44.6% compared with the same month in 2021. The price of motor gasoline exiting refineries in Canada was up 8.0% in February on a month-over-month basis, and was 42.1% higher than February 2021. The price of diesel fuel exiting refineries in Canada rose 9.2% month over month and 47.8% year over year. These increases were mostly attributable to higher prices for crude oil. Russia’s aggression against Ukraine and sanctions against Russia contributed to market uncertainty about oil supply going forward. This occurred while global oil inventories were low. According to the U.S. Energy Information Administration, commercial oil inventories in the Organisation for Economic Co-operation and Development were at their lowest level since mid-2014.
Prices for primary non-ferrous metal products rose 5.7% in February, led mainly by higher prices for unwrought aluminum and aluminum alloys which rose 10.6% month over month and 39.8% year over year. Basic and semi-finished products of aluminum and aluminum alloys (+14.5%) also contributed to the monthly increase in this group. Global aluminum supplies tightened in February as higher energy prices led to production curtailments at European smelters, despite continued demand. Inventories in Shanghai, as well as in London Metal Exchange (LME) warehouses, have fallen since the start of 2022. The benchmark price of aluminum at the LME hit its highest level since 2008 on February 8.In addition to high energy costs, uncertainty about future supply from Russia also drove up the price of aluminum. Prices for unwrought gold, silver, and platinum group metals, and their alloys (+3.3%) were also up compared to January.
The price of softwood lumber was up 8.3% month over month in February, a fifth consecutive monthly increase, which followed a large drop between May and August. On a year-over-year basis, softwood lumber was 31.2% higher than February 2021. Steady demand, transportation problems, and labour issues all contributed to the persisting high prices for Canadian softwood lumber.
Prices for intermediate food products rose 3.3% month over month in February and 27.9% year over year. This was the 25th consecutive month of year-over-year increases for this commodity group. Prices for soybean oil were up 24.2% month over month and 157.2% compared with February 2021. This was partially attributable to unfavourable weather conditions in Brazil, the world’s top global producer and exporter of soybeans.
Prices for ammonia and chemical fertilizers rose 0.5% month over month in February, a 10th consecutive monthly increase. On a year-over-year basis, prices for this product group were up by 88.2%.
Raw Materials Price Index
In February, the Raw Materials Price index rose 6.0% month over month and 29.8% year over year.
Prices for conventional crude oil were up 12.1% month over month in February and 58.4% year over year. According to estimates from the U.S. Energy Information Administration‘s short-term energy outlook, global petroleum consumption outpaced global supply for the 13th consecutive month in February. Amidst this imbalance, uncertainty due to the Russia’s aggression against Ukraine and its consequences on energy supply drove oil prices up.
Prices for metal ores, concentrates and scrap increased 3.8% on a monthly basis. Within this group, prices for iron ores and concentrates rose 8.6%. Gold ores, concentrates and mill billion (+2.9%), as well as silver ores, concentrates and mill bullion (+2.3%), also posted monthly increases.
Higher prices for hogs (+10.6%) and unprocessed milk (+6.3%) led the rise in animals and animal products (+3.2%). Hog prices rose due to tightness in market supply, while unprocessed milk prices rose following a review by the Canadian Dairy Commission of Canadian farm gate milk prices and various other costs used in administering the supply management system.