Canadian manufactured goods prices continued to climb in August, driven largely by rising energy costs linked to renewed tensions between the United States and Iran. According to Statistics Canada, the industrial product price index (IPPI) rose 1.3% in August compared with July, outpacing economists’ expectations of a 0.8% increase and following a 0.3% gain in June. On an annual basis, prices were 13.5% higher, marking the 23rd consecutive year-over-year increase.

The latest monthly advance highlights ongoing inflationary pressures within Canada’s manufacturing sector, particularly due to sustained energy price volatility amid the Middle East conflict. The escalation in energy expenses, including sharp increases in diesel fuel and light fuel oils, played a central role in the broad-based rise in producer prices. Excluding energy and petroleum products, prices still grew by 0.8% from July after a 0.6% decline the previous month.

Further contributing to the August gains were upticks in nonferrous metal prices, including unwrought gold, silver, and platinum group metals, which rose for the first time since January. Chemical prices also increased following a period of softness in July, partially reversing earlier declines experienced earlier this year. Prices for raw materials purchased by manufacturers likewise increased both monthly and annually.

The Bank of Canada has expressed concern that elevated gasoline prices and these escalating producer costs could feed broader inflationary trends, potentially affecting consumer prices in the near term. Although consumer price inflation remained steady in August—staying near the upper limit of the central bank’s 1% to 3% target range—rises in travel costs and rents countered a more moderate increase in gasoline prices.

The central bank also pointed to a potential negative impact on business and consumer confidence due to new U.S. tariffs on Canadian exports. These trade measures could constrain economic growth, which had shown robust rebound momentum in the second quarter of 2026.

Statistics Canada’s industrial product price index reflects the prices manufacturers receive for goods at the factory gate and does not capture the prices consumers ultimately pay at retail. Nonetheless, the sustained increases in producer prices underscore the inflation risks currently facing the Canadian economy amid geopolitical uncertainties and supply chain pressures.