In a positive development, the prices for products manufactured in Canada have rebounded modestly last month following three consecutive months of declines. The latest data from Statistics Canada reveals that the industrial product price index has increased by 0.4% from the previous month, although there remains a 2.7% decrease on a year-over-year basis.
Energy and Petroleum Products Drive Price Increase
Notably, the prices for energy and petroleum products experienced a significant jump of 4.1% month-over-month, marking the second consecutive month of growth. This rise can be attributed to an increase in crude oil prices, which has been influenced by restricted supply from the Organization of the Petroleum Exporting Countries (OPEC) and its partners.
Producer Prices Remain Stable
Excluding energy products, producer prices have remained steady in July, showing no change on a monthly basis. However, compared to the same period last year, producer prices have risen by 0.5%, indicating some resilience in this sector.
Softwood Lumber Prices Surge
Softwood lumber prices have experienced their largest monthly increase since December 2021. Several factors, including wildfires in Canada's Pacific Northwest and a strike by port workers in British Columbia, have contributed to market uncertainty and resulted in this significant uptick.
Meat, Fish, and Dairy Product Prices Decline
On the other hand, prices for meat, fish, and dairy products have decreased on a monthly basis. Notably, the price of beef has dropped for the first time since last October.
Raw Material Prices Record Growth
In terms of raw materials, prices paid by manufacturers have risen by 3.5% from June. However, when compared to July of the previous year, raw material prices have declined by 11.1%. Notably, the cost of crude energy increased after two months of decline, with crude oil playing a crucial role in this upward trend. Additionally, prices for live animals, particularly hogs, have gone up, and crop products such as canola and wheat have also experienced price increases.
Bank of Canada Reacts to Inflation
The Bank of Canada recently raised its main interest rate to a fresh 22-year high due to stubborn core inflation levels driven by robust consumer demand and a tight labor market. With annual inflation reaching 3.3% in July, the central bank expects it to hover around 3% for the next year as economic growth becomes more subdued.