Despite some strong price fluctuations in raw materials, economists aren’t sounding the alarm on inflation.

Statistics Canada says the Raw Materials Price Index dropped 7% in March from a year ago, the eighth consecutive period of annual decline. Mineral fuels were responsible for most of the retreat in the index. If mineral fuels had been excluded, the RMPI would have declined 4.5%.

The RMPI is up 5.5% from February 2002. RBC Financial says the monthly increase was greater than expected, but excluding the huge gains in mineral fuel prices, the RMPI rose just 0.4% in month over month.

so while the IPPI rose 0.6% from Feb. 2002 to Mar. 2002; it is down 1.2% measured from Mar. 2001…

The Industrial Product Price Index fell 1.2% in March compared with March 2001, their sixth consecutive decline. Lower petroleum and coal product prices led the way. If they had been excluded, the IPPI would have fallen 0.2% instead of 1.2%.

Compared to February 2002, the IPPI rose 0.6%. BMO Nesbitt Burns says that gain was in line with expectations. “Rising commodity costs have pushed prices received by producers up for three consecutive months, the longest streak of increases since the end of 2000. However, prices remain 1.2% below year-ago levels as commodity prices, while recovering, remain low.”

Energy prices have moved up sharply in recent months, surging by 7.3% in April, notes BMO Nesbitt. But they remain well below the levels of a year ago. Ex-energy, industrial prices rose 0.2%, and are down slightly year-over-year.

“While headline Canadian industrial product prices were strong in March, core prices remain muted and there is little cause for concern over pipeline inflation pressures,” says BMO. “However, cyclically sensitive prices, such as primary metals, appear to have bottomed and may continue to creep up as the recovery in manufacturing gains further traction.”