Canada raw materials prices have biggest drop since 2008

Canada’s raw materials prices posted their biggest drop in two and a half years in May as the price of crude oil tumbled, government figures showed.

The Raw Materials Price Index fell 7.2%, while crude oil fell 14.2%, Statistics Canada said. It was the first drop in five months and the biggest decline since December 2008, it said.

Excluding mineral fuels, the index would have dropped 1.5% in May, it said.

Non-ferrous metal prices also fell, posting a 6.1% drop in the month because of increased supply, it said.

Prices of industrial products gained in the month as the Canadian dollar declined against its U.S. counterpart.

The Industrial Product Price Index increased 0.3%, StatsCan said, mainly because of a 3.4% decline in the loonie during the month.

Some Canadian producers who export their products to the United States are paid in US dollars. Therefore when the loonie is weak, corresponding prices in Canadian dollars are higher.

If the exchange rate used to convert those prices had remained unchanged, the IPPI would have declined 0.6% instead of increasing 0.3%, it said.