Industrial and raw materials prices fell sharply in June as energy costs plummeted

Industrial product prices in Canada fell sharply in June, driven by a significant decline in energy costs after a tentative agreement between the United States and Iran improved shipping prospects through the Strait of Hormuz.

The Industrial Product Price Index (IPPI), which measures prices of products manufactured in Canada, declined 1.4% month-over-month in June, ending five consecutive monthly increases from January through May. Excluding energy and petroleum products, the IPPI edged down just 0.1%, mainly due to declining prices for primary non-ferrous metal products.

Energy and petroleum products fell 9.1% in June after five straight month-over-month increases. Lower prices for refined petroleum products contributed the most, with finished motor gasoline falling 11.0% on a monthly basis and diesel fuel declining 9.7%. Crude energy product prices dropped 13.7%, the second straight month-over-month decline, which reduced input costs for refined petroleum products.

Prices for primary non-ferrous metal products fell 4.7% month-over-month—the largest monthly decline since July 2022. A substantial decline in unwrought gold, silver, and platinum group metals and their alloys fell 9.8%, marking the fifth consecutive month-over-month decline for the precious metal product group and the largest decline since October 2011. In June, unwrought silver and silver alloys fell 12.9%, unwrought gold and gold alloys dropped 5.5%, and unwrought platinum group metals and their alloys declined 10.8%.

Higher prices for lumber and other wood products moderated the overall monthly decline, rising 2.6% in June and recording a sixth consecutive monthly gain. Softwood lumber prices surged 6.1%, posting the largest month-over-month increase since November 2024.

Year-over-year, the IPPI gained 12.4% in June, marking the index's 21st consecutive month of year-over-year increase. The main contributors to the annual gain were unwrought gold, silver, and platinum group metals, and their alloys, which rose 52.1%; diesel fuel, up 45.1%; and finished motor gasoline, up 38.0%. Plastic resins climbed 70.8%, unwrought aluminum and aluminum alloys jumped 41.7%, and unwrought copper and copper alloys rose 41.6%.

The Raw Materials Price Index (RMPI), which measures prices of raw materials purchased by manufacturers operating in Canada, decreased 6.9% month-over-month in June—the largest monthly decline since July 2022 and the first decline since March.