September 30, 2014 / 12:48 PM / 5 years ago

Canadian factory prices rise in August, boosted by weak dollar

OTTAWA (Reuters) - Canadian producer prices increased by 0.2 percent in August over July as the weak Canadian dollar boosted prices for motorized and recreational vehicles, Statistics Canada said on Tuesday.

Market analysts had expected a 0.2 decrease after July’s 0.3 percent drop. Prices rose by 2.5 percent from August 2013, down from the 2.8 percent year-on-year gain noted in July.

Prices for motorized and recreational vehicles advanced by 1.0 percent from July, thanks mainly to the 1.7 percent decrease in the value of the Canadian dollar against the U.S. dollar in August.

There is significant trade in vehicles between Canada and the United States. Some exporters price their goods in U.S. dollars, which means they get more Canadian dollars as the domestic currency weakens.

Raw material prices dropped by 2.2 percent in August from July, greater than the 1.5 percent decline expected by market operators. The main driver for the fall was a 3.3 percent drop in prices for crude energy products.

Prices fell by 0.6 percent from August 2013 after increasing 2.5 percent year-over-year in July. It was the first decrease in the annual index since November 2013.

Reporting by David Ljunggren; Editing by Meredith Mazzilli

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