inflation
istock.com / shauni

Driven by higher energy prices, weather, and geopolitics, the cost of raw materials and industrial products surged in January, according to new data from Statistics Canada.

The national statistics agency reported that the prices of raw materials for Canadian manufacturers increased by 3.7% in January, and were up 11.8% on a year-over-year basis.

Crude energy products were the primary driver of the increase in January, StatCan said — excluding crude energy, prices were up 1.6% in the month.

In January, prices for crude energy products rose by 7.2% month over month.

“Higher crude prices were partly due to new sanctions on Russian oil announced by the U.S. government,” StatCan said, adding that U.S. inventory reductions also boosted crude prices.

Along with costlier crude, the year-over-year increase in raw material prices was driven by higher precious metal and cattle prices, partly offset by lower prices for iron and natural gas, the data showed.

Alongside costlier raw materials, the prices for products manufactured in Canada, measured by StatCan’s Industrial Product Price Index (IPPI), was up 1.6% in January, and increased 5.8% on a year-over-year basis.

Higher prices for energy products, which were up 7.0%, also drove the increase in the IPPI in January, it noted. Excluding energy and petroleum products, the index was up 0.9% in the month.

Costlier crude oil fed through to higher prices for refined energy products, including diesel fuel and gasoline.

“Additionally, colder weather in January across Canada and some regions of the United States raised heating oil demand,” StatCan said, noting that his boosted diesel prices.

Outside of energy, food product prices were up 2.1% in January, chemical prices rose 2.3%, and metals prices were up 1.2%.

Higher crude prices helped drive chemicals prices up, as did plant shutdowns in the U.S. due to a winter storm, StatCan noted.

Also, gold prices hit a new record high in late January, “spurred by safe-haven demand as investors weighed the possibility of the United States imposing new tariffs on international trade,” it said.