Canadian manufacturers faced another month of higher upstream costs in September, but the pressure was heavily concentrated in energy.
Statistics Canada reported on October 22 that raw materials purchased by manufacturers rose 4.8% from August and 27.0% from a year earlier. Factory-gate prices for products manufactured in Canada, measured by the Industrial Product Price Index, rose 2.0% month over month and 14.5% year over year.
Diesel carried the factory-gate increase
Energy and petroleum products rose 12.1% from August, with refined petroleum energy products up 13.7%. Diesel fuel had the largest impact inside that group, rising 18.4% month over month. Finished motor gasoline gained 7.8%, and light fuel oils rose 15.4%.
Statistics Canada said the resumption of the conflict between the United States and Iran in August continued to contribute to higher prices for energy and petroleum products in September.
On a year-over-year basis, the energy numbers were much larger. Diesel fuel rose 106.1%, light fuel oils rose 99.4%, and finished motor gasoline increased 45.3%.
For raw materials, crude energy products rose 14.4% in September after a 7.1% increase in August. Conventional crude oil rose 16.8%, while synthetic crude oil increased 9.0%.
Excluding crude energy products, the Raw Materials Price Index fell 0.4% in September. Excluding energy and petroleum products, the Industrial Product Price Index edged up 0.3%.
Plastic resins add pressure outside fuel
Chemicals and chemical products rose 3.8% in September, reversing a 0.3% decline in August. Statistics Canada said the increase was primarily due to dyes and pigments, and petrochemicals, which rose 9.7%. Plastic resins climbed 11.0%, while fertilizers, pesticides and other chemical products rose 4.1%.
For technology sellers and service providers, plastics matter less as a headline commodity and more as a cost embedded in packaging, peripherals, cables, replacement parts and shipping materials. The Statistics Canada data does not show retail price changes, but it points to a cost channel that can affect supplier quotes and margins if increases persist.
Not all raw materials moved higher
September’s raw-material increase was not broad across every major category. Metal ores, concentrates and scrap fell 0.7% month over month. Animals and animal products declined 1.1%, led by an 8.8% drop in hog prices. Crop products rose 2.1%, with canola up 3.7%.
Year over year, the Raw Materials Price Index was still broadly higher. Crude energy products made the largest contribution to the 27.0% annual increase, while gold, silver and platinum group metal ores and concentrates rose 32.7%.
The link to consumer prices is visible but not automatic
Statistics Canada cautions that the Industrial Product Price Index does not measure consumer prices. It tracks prices producers receive when goods leave the factory gate and excludes indirect taxes, tariffs and costs that occur after goods leave the plant, such as transportation, wholesale and retail costs. The Raw Materials Price Index reflects prices paid by manufacturers for key raw materials and includes charges needed to bring commodities to the establishment gate.
Even with that caveat, September’s consumer price data showed energy pressure in household inflation. The Consumer Price Index rose 3.1% year over year, gasoline rose 27.8%, and energy rose 19.0%. Excluding gasoline, the CPI rose 2.2%.
The Bank of Canada’s third-quarter Business Outlook Survey, conducted mostly before the August 21 breakdown in Canada-U.S. trade talks, added another layer. The Bank said firms continued to point to higher fuel prices, linked to the war in the Middle East, and tariffs as upward pressure on expected costs. Roughly half of firms planned to pass on some or all of their cost increases related to the war in the Middle East and tariffs to customers.
A data note for September
September was also the first reference month in a staged transition to a new sample for the Industrial Product Price Index and Raw Materials Price Index, based on the 2022 Annual Survey of Manufacturing and Logging Industries. Statistics Canada said the transition will happen in stages through the December 2026 reference month, and index values computed using the existing sample will not be revised with data from the new sample.
The next release will show whether the pressure broadened
Statistics Canada said the October 2026 industrial product and raw materials price indexes are scheduled for release on November 19. The item to watch will be whether non-energy components stay restrained or whether supplier price increases broaden beyond fuel, crude oil and petrochemical-related products.
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