Canada’s producer prices fell more than expected in June, while raw material prices posted a sharp monthly decline as energy and metals prices weakened.

The prior monthly Industrial Product Price Index (IPPI) reading was revised to +1.4% from +1.2%. In June, producer prices fell 1.4% month over month, compared with expectations for a 0.4% decline. On a year-over-year basis, the IPPI rose 12.4%, down from 13.6% in the previous month.

The Raw Materials Price Index (RMPI) declined 6.9% month over month, compared with a 0.5% increase in the previous month. On a year-over-year basis, the raw material price index rose 20.7%, down from 33.4% last month.

The main driver of the June IPPI decline was a sharp fall in energy prices. A tentative U.S.-Iran agreement eased concerns over shipping through the Strait of Hormuz, sending energy prices sharply lower. Excluding energy and petroleum, the IPPI edged down 0.1%, led by weaker prices for primary non-ferrous metal products.

Among major IPPI components, energy and petroleum products fell 9.1%. Refined petroleum products declined 10.3%, finished motor gasoline fell 11.0%, and diesel fuel dropped 9.7%. Crude energy products declined 13.7%, marking a second consecutive monthly decrease.

Primary non-ferrous metal products fell 4.7%, the largest monthly decline since July 2022. Within precious metals, silver dropped 12.9%, platinum group metals fell 10.8%, and gold declined 5.5%. Precious metals recorded a fifth consecutive monthly decline after a strong rally through early 2026.

Lumber and wood products provided an offsetting source of strength, rising 2.6% for a sixth straight monthly increase. Softwood lumber prices gained 6.1%, the largest monthly increase since November 2024.

For raw material prices, the main drivers were sharp declines in crude energy products and in metal ores, concentrates, and scrap. Excluding crude energy products, the RMPI declined 2.7%.

Crude energy products fell 13.7%. Conventional crude oil dropped 15.7%, while synthetic crude oil declined 9.8%. Prices fell after the announcement of a tentative U.S.-Iran agreement, which eased concerns over possible oil supply disruptions.

Metal ores, concentrates, and scrap declined 5.1%, the largest monthly fall since June 2023. Gold, silver, and platinum group metal ores dropped 8.4%, the largest monthly decline since July 2017. Nickel ores and concentrates fell 4.3%.

Overall, Canada’s producer and raw material prices both fell sharply in June, reflecting broad-based easing in commodity costs. The IPPI declined 1.4%, ending a five-month streak of increases, while the RMPI dropped 6.9%, its largest monthly decline since July 2022. Because the RMPI tracks input costs and the IPPI tracks factory-gate output prices, the simultaneous declines point to easing at more than one stage of the production chain, even though these indexes do not measure final consumer prices.

Lower crude oil prices flowed through to refined petroleum products, while precious metals and other non-ferrous metals also weakened. Excluding energy, both measures still posted declines, indicating that softer pricing pressures extended beyond the energy sector. Lumber was the main area of strength, with prices continuing to rise on firm demand.

The source noted that the decline in energy prices was the favorable aspect of the report, while also cautioning that a move back higher in energy could create a risk of another rebound. It said central banks would remain alert for secondary effects from rising costs and any impact on inflation expectations.

The IPPI reflects the prices that producers in Canada receive as goods leave the factory gate. It does not reflect what consumers pay. Unlike the Consumer Price Index, the IPPI excludes indirect taxes, such as sales taxes and tariffs, as well as all costs that occur between the time a good leaves the plant and the time the final user takes possession of it. These costs include transportation, wholesale, and retail expenses.

Although the IPPI does not measure the direct effect of tariffs on prices, tariffs may indirectly influence prices captured by the index. For example, imported inputs used in production that are subject to Canadian tariffs may raise prices charged by Canadian producers. Tariffs on Canadian imports or exports may also indirectly affect IPPI prices through their impact on supply and demand dynamics.

The RMPI reflects the prices paid by Canadian manufacturers for key raw materials. It includes all charges purchasers incur to bring a commodity to the establishment gate, including transportation charges, net taxes paid, customs duties, and tariffs paid on imported raw materials.