Canada’s Industrial Product Price Index Flat in June Due to Lumber and Other Wood Products Price Declines

Statistics Canada (StatsCan) today (7-30-21) released the Industrial Product Price Index (IPPI) for June. The IPPI was unchanged month-over-month in June and was up 16.8% when compared with June 2020. The Raw Materials Price Index (RMPI) increased 3.9% on a monthly basis in June and was up year-over-year 38.1%. In the IPPI, the top-level index was flat, 15 of the 21 major subcomponent groups were up, five were down, and one was unchanged.

The biggest influence on the IPPI in June was the decline in the lumber and other wood products (-6.8%) category. If lumber and other wood products were excluded from calculation, the IPPI would have risen 0.6%. The movement in the lumber group was primarily due to lower prices for softwood lumber (-12.5%), which decreased for the first time in seven months. This followed a remarkable 118.0% ascent between November 2020 and May 2021. The descent in June was largely influenced by higher supply at sawmills. Market dynamics were complex, as data from the U.S. Census Bureau showed that housing starts in the United States were up 6.3% month over month, while building permits fell 5.1%. The US is the primary purchaser of Canadian softwood lumber. Currently available market benchmarks show that the fall in softwood lumber prices continued into July.