RENEWABLES: German Wind Output Forecast Comparison

Industrial product and raw materials prices came in stronger than expected in August, with "core" measures showing some signs of acceleration. The implications for CPI aren't straightforward but there doesn't appear to be much price relief in the pipeline for or from Canadian producers.

• The Industrial Product Price Index (IPPI), which measures the prices of products manufactured in Canada, rose 0.5% M/M (NSA) vs consensus 0.1% (0.7% prior was unrevised). The ex-energy/petroleum index advanced 0.7% after 0.5%, with energy/petroleum products -1.3% after +2.7%.
• With these being non-seasonally adjusted figures, the Y/Y comparison is more apt for trend analysis: ex-energy/petroleum IPPI accelerated for the 4th consecutive month on a Y/Y basis, to 4.9% (3.8% prior, trough of 2.6% in May) for a 5-month high.
• The prices of raw materials purchased by manufacturers operating in Canada fell 0.6% M/M (NSA) in Aug, but ex-energy/petroleum rose 0.9%, per the Raw Materials Price Index (RMPI). The latter measure was up 15.5% Y/Y, vs 12.6% prior, for a 5-month high.
• The consumer price inflation implications aren't straightforward. IPPI has been distorted to the upside by a jump in precious / semi-precious metals prices (+36.3%), which as Statistics Canada points out "were supported by strong safe-haven investment demand over the 12 months ending in August" with the latest M/M uptick supported by expectations for a Fed cut in September.
• That said, there were pressures in food categories including fresh and frozen beef and veal (+28.9% Y/Y) and fresh and frozen poultry (+18.4%). Likewise, the raw materials increase Y/Y owes heavily to gold/silver/platinum group metal ores and concentrates up +37.0% Y/Y), though also very strong was cattle (+19.9%).
• Capital/durable goods inflation has been steadying out across various categories in IPPI albeit at elevated levels amid the US-Canada trade conflict. However food prices have already been on the relatively elevated side in CPI (3.4% Y/Y in August, double the rate of core goods at 1.7%), so this could be an area of more direct concern for the outlook.

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