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Factory prices hit by stronger loonie

July 30, 2014

Industrial product prices in Canada slipped by 0.1% in June from May as the strong Canadian dollar cut the prices for motorized and recreational vehicles, Statistics Canada said on Wednesday.

The drop the third such monthly decline in a row matched analysts' expectations. Prices rose by 3% from June 2013, down from the 3.4% year-on-year advance noted in May.

Prices for motorized and recreational vehicles fell by 0.3%, largely due to the 0.6% increase in the value of the Canadian dollar against the U.S. dollar in June.

There is a significant trade in vehicles between Canada and the United States. Some exporters price their goods in U.S. dollars, which means they get fewer Canadian dollars as the domestic currency strengthens.

Raw material prices rose by 1.1% from May, largely as a result of higher prices for crude energy products. The increase was greater than the 0.4% month-on-month growth forecast by analysts.

Prices rose by 9.2% in the year to June after a 7.7% year-on-year jump in May, thanks to a 15.6% rise in the prices of crude energy products.

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Source: Baystreet Economic Commentary (Canada)

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