"And there's a very good chance that Canada actually may have grown a little bit faster than the US in the third quarter."
- Douglas Porter, BMO's chief economist.
Industrial product prices in Canada reversed gains from last month in August, while raw material prices declined for the second month in a row, dropping the most since January. However, both readings were released better than anticipated by the markets. According to the Statistics Canada, the measure of industrial product prices fell 0.3% during the reported period, after rising 0.7% in July, whereas economists expected to see a larger drop of 0.5%. At the same time, the raw materials price index plummeted 6.6% on a monthly basis, following a downward revised decrease of 6% in the preceding month, while markets forecasted a 7.5% loss.
Negative changes for both indexes were mostly driven by lower prices for energy and petroleum products, which were down by 4.7%, the largest decline in seven months. Lower prices were also reported for chemicals and chemical products. Nevertheless, some part of decline was offset by higher costs of imported products due to depreciation of the Canadian Dollar. Meanwhile, dipping industrial and raw material prices could help the BoC to meet its 2% inflation goal. Other August data released earlier in the month revealed that Canadian core inflation eased to 2.1% from 2.4%, but still remained above the target of the Bank of Canada.
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