Statistics Canada’s latest data shows that producer prices in Canada have continued their downward trend, with a 0.6% decline in June. This marks the third consecutive monthly decrease, highlighting ongoing easing of pricing pressures in the country. On a twelve-month basis, the producer-price index has fallen by 5.5%.
Excluding energy products, producer prices were 0.9% lower in June compared to the previous month. The main contributor to this drop was a decrease in prices for non-ferrous metal products. Additionally, declines were also observed in primary ferrous metal products, chemicals and chemical products, and pulp and paper products.
It’s important to note that the industrial product price index measures the prices received by manufacturers in Canada once their goods leave the plant; it does not reflect the final prices consumers pay for goods.
In line with the falling producer prices, prices for raw materials paid by manufacturers have also declined. In June, there was a 1.5% retreat compared to May. On a year-over-year basis, raw material prices dropped by a significant 19.7%, making it the fifth consecutive year-over-year decline and the largest fall since April 2020. Crude energy products and metal ores, concentrates, and scrap were among the key contributors to this decline.
The recent increase in the Bank of Canada’s main interest rate to 5.0% reflects concerns about inflation and the potential risk of stagnation. The central bank will continue to monitor inflation closely and is open to further interest rate increases if necessary. Currently, annual inflation is forecasted to hover around 3% for the next twelve months, following a cooling of the consumer price index to 2.8% in June.
