October 31, 2017 / 12:36 PM / a year ago

UPDATE 1-Canada Sept producer prices drop 0.3 percent on autos

(Adds details of release, background)

OTTAWA, Oct 31 (Reuters) - Producer prices in Canada fell 0.3 percent in September from August as a stronger Canadian dollar cut the cost of motorized and recreational vehicles, Statistics Canada said on Tuesday.

Analysts in a Reuters poll had forecast prices would increase by 0.4 percent from August. Of the 21 major commodity groups, 16 were down, four rose and one remained unchanged.

Prices for motorized and recreational vehicles slipped by 1.6 percent, the fourth consecutive monthly decline, thanks largely to a 2.6-percent gain in the value of the Canadian dollar against the greenback in August.

Many vehicles are priced in U.S. dollars and become less expensive when the Canadian currency strengthens. The producer price index would have increased by 0.3 percent had the exchange rate stayed constant.

Raw material prices edged down by 0.1 percent as the animal and animal products group fell by 7.0 percent, the largest month-on-month decrease since July 2003. Analysts had expected a 0.4-percent gain.

Reporting by David Ljunggren; Editing by Nick Zieminski

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