Surging oil prices fuel manufacturing inflation pressures in Canada

OTTAWA – Factory prices and the cost of raw materials surged in November as the high cost of oil showed signs of filtering through to the general economy.

Statistics Canada reported Friday that prices charged by manufacturers for their goods rose 0.6 per cent in November after six straight monthly declines. Meanwhile, raw material costs jumped 3.4 per cent, boosted by steep increases in oil and coal prices which have only accelerated in recent weeks.


On a 12-month basis, the industrial products index actually was down 0.6 per cent from November 2006, whereas the raw materials price index rose 15.7 per cent.

With oil hitting US$100 a barrel this week, economists say the November surge could be a signal that inflation may erupt and stay the Bank of Canada’s hand on future interest rate cuts.

“It’s certainly something the bank has to take into consideration,” said BMO Capital Markets economist Kenrick Jordan.

The Canadian Press