Chemicals, autos push down producer prices

Producer prices dropped by 0.3 percent in July from June, the third consecutive monthly decline, on lower prices for chemicals and motor vehicles, Statistics Canada said on Tuesday.

The drop was greater than the 0.1-percent decline predicted by market analysts.

Prices for chemicals and chemical products in July dropped by 2.6 percent on weaker market conditions and the strong Canadian dollar, which hits manufacturers who set their prices in U.S. dollars. A 1.3-percent decline in motor vehicle prices was primarily a result of the 2.2-percent rise in the value of the Canadian dollar against the U.S. dollar.

Stripping out the impact of the strong Canadian dollar, producer prices would have risen by 0.2 percent in July.

Raw materials cost 1.2 percent less in July than in June, the third consecutive monthly retreat, on a 2.2 percent drop in prices for mineral fuels.

Compared with a year earlier, producer prices rose 5.1 percent and raw materials prices gained 19.4 percent.