Manufacturers’ and raw material prices both jumped in February over January — the former up 1.8% , the latter up 3.4% — but were still down vs a year ago, Statistics Canada said Wednesday.

Analysts said both increases were larger than expected.

The jump in manufacturers’ prices followed an increase of 0.6% in January. Meanwhile, Statscan said mineral fuels accounted for about half of the monthly increase in the Raw Materials Price Index.

Statscan said that compared with February 2003, manufacturing prices fell 2.5%, largely because of the effect of the Canadian dollar against the U.S. dollar. Without the dollar’s influence, the Industrial Product Price Index would have risen 1.1%.

Manufacturers paid 7.4% less for their raw materials than they did in February 2003, compared with a decrease of 7.1% in January. Mineral fuels were down 14.4% from a year ago with crude oil prices declining 17.2%. If mineral fuels had been excluded, the RMPI would have decreased 0.9%.

BMO Nesbitt Burns Inc. chief economist Sherry Cooper said that with slowdown in thr rise of the C$, prices received by Canadian producers are starting to firm. “The year-on-year comparison still shows the squeeze on profits from the loonie’s ascent, but the short-term trends provide a more hopeful outlook for pricing power, ” Cooper said in a repoprt. “This trend should at least raise a few warning flags that inflation is bottoming, even in Canada.”

Statscan said that on a monthly basis, motor vehicles and other transport equipment increased 1.8%, mainly because of the effect of the exchange rate. Lumber and other wood products were up 6.2% from January. Higher prices for softwood lumber and particleboard, resulting from strong demand, were responsible for this increase. Primary metal products rose 4.4% as prices continue to increase for copper, nickel, aluminum, and lead products. Higher prices were also observed for petroleum and coal products (+4.2%), pulp and paper products (+2.1%), as well as meat, fish and dairy products (+1.8%).

On a 12-month basis, February represents the 11th consecutive month of decline in the IPPI. Lower prices continued for motor vehicles and other transport equipment (-8.9%), electrical and communication products (-6.7%), as well as pulp and paper products (-3.5%). These products remain the major contributors to the 12-month decline in the IPPI.

The petroleum and coal products group continued to have a strong influence on the 12-month change in the IPPI with a decrease of 9.5%. If petroleum and coal product prices had been excluded, the IPPI would have declined 1.9% on a 12-month basis.

Higher prices for primary metal products (+7.3%), lumber products (+8.2%), tobacco products (+8.0%), fruit, vegetable and feed products (+1.0%), beverages (+2.8%), as well as furniture and fixtures (+1.9%), partially offset the 12-month decline.

On the raw materials side, mineral fuel prices rose 2.8%. Stastscan said crude oil prices rose 3.4% from January as a result of tight supply and increased demand because of colder temperatures. Prices for non-ferrous metals rose 9.1% as strong demand continued for copper, lead, zinc and nickel concentrates. Animals and animal products were up 2.5% with prices for hogs for slaughter increasing 28.4%. Higher prices for vegetable products (+4.1%) and ferrous materials (+7.0%) also contributed to the monthly increase.

The RMPI reflects the prices paid by Canadian manufacturers for key raw materials. Many of these prices are set in a world market. Unlike the IPPI, the RMPI includes goods not produced in Canada.

The IPPI reflects the prices that producers in Canada receive as the goods leave the plant gate. It does not reflect what the consumer pays. Canadian producers often quote their prices in foreign currencies, particularly for motor vehicles, pulp, paper, and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI.