Canada - Producer Price Index (PPI)





Canada: Producer Price Index (PPI)

Mnemonic PPI.ICAN
Unit Index 2010=100, NSA
Adjustments Not Seasonally Adjusted
Monthly 0.34 %
Data Jul 2019 117.3
Jun 2019 117.7

Series Information

Source Statistics Canada
Release Industrial Product and Raw Materials Price Indexes (CANSIM)
Frequency Monthly
Start Date 1/31/1956
End Date 7/31/2019

Canada: Price

Reference Last Previous Units Frequency
Consumer Price Index (CPI) Jul 2019 136.5 135.9 Index 2002=100, SA Monthly
Producer Price Index (PPI) Jul 2019 117.3 117.7 Index 2010=100, NSA Monthly

Release Information

The Industrial Product Price Index (IPPI) measures price changes for major commodities sold by manufacturers in Canada. The prices collected are for goods sold at the factory gate. As a result, the prices covered by the IPPI refer not to what a purchaser pays but to what the producer receives. They exclude all indirect taxes, such as sales taxes and tariffs as this money does not go to the factors of production (i.e. labour, capital, or profit). They also exclude any transportation service performed by a common carrier beyond the factory gate and any distribution services performed by the retail or wholesale trade industries.

The IPPI measures the movement in prices for manufactured goods produced in Canada, destined for domestic or export consumption. This translates to a ready measure of economic performance of the Canadian manufacturing sector. In addition, the IPPI series supports the Canadian System of National Accounts (SNA), where it is used in the calculation of real Gross Domestic Product (GDP) by Industry. Together, they serve as important indicators of the health of the economy. The current time base and weight base is 2010=100.

The Raw Materials Price Index (RMPI) measures price changes for raw materials purchased by industries in Canada for further processing. As a purchasers' price index, prices include all charges purchasers incur to bring a commodity to the establishment gate. Thus transportation charges, net taxes paid, and custom duties are all included, as well as the effects of subsidies, if any are paid to the purchaser. The RMPI is produced and published together with the IPPI as it meets many of the same interest and needs. The index provides the movement in prices for a group of major inputs into goods produced in Canada. It helps cover the spectrum of price changes in the Canadian economy, and is valuable directly and in relation to the price movements of products derived in part from these materials. The current time base and weight base is 2010=100. For most products included in the RMPI, the collection process occurs over a three-week period starting during the last week of the reference month.

Target population

The target population universe of the IPPI consists of those manufacturing establishments residing and producing in Canada, as identified through the Annual Survey of Manufactures (ASM). The geographical universe for the IPPI is all of Canada, while the industry universe corresponds to the North American Industry Classification System (NAICS) and the commodity universe is all industrial goods manufactured in Canada. Finally, the price universe is the producer price, that is the price collected for goods sold at the factory gate and excluding taxes, tariffs, transportation costs, etc.

Instrument design

Commodity specialists mostly collect price data through the form of mail-out questionnaires, which contain technical descriptions or specifications for the selected products, originally supplied by the respondent (e.g. Ready-mix concrete, 20mpa, cold mix without heating charge or additives). In addition to the commodity description, the questionnaire outlines the terms of sale for which the price applies (e.g. Price per cubic metre to local contractor, all taxes extra, f.o.b. local area, Can$). The questionnaire was developed in the mid 1980's by Prices Division analysts and systems programmers, as well as the feedback received from respondents.

Sampling

This is a sample survey. The sampling frame for the IPPI is based on the most recent data available from the ASM. The most common survey unit is the "establishment" which, in Statistics Canada's usage, refers to the smallest unit of an organization that can provide the basic data required for industry statistics, most commonly an individual plant or factory. Sampling for any directly surveyed elemental index is usually done by a formal probability sampling procedure. Important producers are "must take" respondents. A random selection is taken from the smaller producers. These samples are redrawn on a regular cycle as dictated by changes in the market. A directly surveyed elemental index is usually supported by 12 to 15 price quotes. An index may be derived from as few as 8 quotes or as many as 30 quotes. Each month, about 9,000 price quotes, from about 3,000 producers for goods sold, are used in the calculation of the IPPI. The entire survey sample is usually reviewed in total once every 5 years. In the interim, re-sampling occurs primarily for commodity groups subject to relatively rapid development in firm structure or product development. About 700 of the 980 Principal Commodity Group Aggregates (PCGA's) in the manufacturing sector are accommodated by direct survey and these account for about 90% of the value of manufacturing output in 1997. The price movement for the other PCGA's is estimated indirectly from either directly priced PCGA's or through borrowing price movements from other price series.

Data sources

Responding to this survey is mandatory. Data are collected directly from survey respondents and derived from other surveys. The prices of most of the commodities surveyed for the IPPI are collected monthly, usually over a three-week period. In an effort to minimise respondent burden, prices are collected less frequently in those cases where price changes occur normally at other intervals (e.g. quarterly). The price information collected relates to the month in question. The goal is to obtain the average price for the reference month. In order to do so and still remain timely, the IPPI is derived from prices reported for the 15th of the month or the nearest prior business day for comparable transactions. However, if special circumstances exist where respondents provide more than one price for the month, a weighted monthly average would be derived. 

Error detection

In the day-to-day collection and processing of these indexes, great emphasis is placed on the examination and evaluation of prices. Commodity specialists watch closely developments in the markets. They review the behavior of the reported price changes, both to validate them directly and to ensure they are representative of the product price movement as a whole. Outliers and incorrect or suspicious prices are identified during the initial data processing and then verbal follow-ups are carried out with the respondents to ensure the appropriate information has been obtained.

Imputation

Imputation is generally carried for missing data. In any given pricing period, there will be monthly price reports that are missing, due to the fact that respondents are late reporting or for some other reason. In this situation, either the last reported price quotation will be carried forward or an estimate will be made based on other information. Most commonly, the last reported price would be carried forward in the short term while the commodity officer seeks clarification from the respondent. Carrying the previous price quotation forward is acceptable, as a significant number of prices do not change by much in any given month. Still, it is almost certain that some of the missing prices will have changed and for this reason, price indexes remain subject to revision for six months after publication of a given month's data. This is to accommodate late reports, corrections and some price quotations that are supplied quarterly or semi-annually. 

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Data accuracy

The IPPI attempts to express, in a single number, price changes that involve a range of commodities. There is no obvious, let alone absolute, way of perceiving what a composite price movement really is. For the IPPI, the fixed quantities of the commodities are proportional to the sales made by manufacturing establishments in Canada in the basket reference period, which is, 2010. Consequently, considerations about the quality of the IPPI relate to these concepts of composite price movements. 

The statistical accuracy of this index depends on price and shipment value data. Price data are obtained from a sample survey. Shipment value data mainly rests on other sample surveys, such as the ASML. Therefore, these data are subject to their own errors. Users concerned with the accuracy of the underlying ASML data are invited to contact the Manufacturing and Energy Division.

In addition to sampling errors, producer price indexes are also subject to errors in price collection and editing. This is particularly true when quality change occurs in the sample with regard to the estimation of pure price change. To estimate pure price change over time, the prices to be directly compared through time ought to refer to identical commodities sold by identical establishments under identical conditions of sale. When this is not practical, prices must undergo adjustments for quality differences, which can prove to be a complicated process to implement. Among the thousands of prices that are compared every month to those of the preceding month, some may not fully satisfy these requirements. The total distortion from this source of error is not thought to be as significant at higher levels of IPPI aggregation.

Though the IPPI uses a sample survey methodology to obtain the necessary information, confidence intervals are not currently estimated, due to the longitudinal nature of price index series. Indexes for higher and lower levels of aggregation are considered to be statistically reliable.

Data is preliminary and subject to revision for the six months after first posting. 

The above information was quoted from Statistics Canada. More information can be found here.

Distributed under license from Statistics Canada: usage subject to an End User License.