Small Business Terms: What Is the Raw Materials Price Index (RMPI)?

by Greg DePersio

0 min read

The Raw Materials Price Index (RMPI) is an index used to explain the relative change in the price of raw materials purchased by Canadian manufacturers. Essentially, the RMPI looks at the prices of a basket of manufacturing expenses that includes raw materials, transportation costs, taxes, and duties. Then, it compares the price of these goods from the previous year to create a ratio or index.

Analysts use this index as an early warning indicator for inflation. Rising prices in manufacturing costs eventually correspond to rising consumer prices. As a business owner involved in manufacturing, you can use the index to assess when commodities prices are on the rise, determine when you need to increase your manufacturing budget, and track relative changes in your business expenses compared to national shifts in the prices of raw materials.

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