Construction input prices rose 1.5 percent in August compared to July, according to an Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices also increased 1.5 percent in August but are up just 0.2 percent from a year ago.
Rising energy prices drove overall price increases in August. Crude petroleum prices were up 8.9 percent and unprocessed energy materials prices rose 5.4 percent.
“Anyone who thought that excess inflation would simply go away later this year has been rudely awakened this week,” says ABC chief economist Anirban Basu. “Yesterday’s consumer price data and today’s PPI release indicate that price growth continues to be problematic. While energy prices will grab headlines, items like concrete and switchgear also exhibited inflationary tendencies in August.
“There are many implications for construction contractors, including the fact that persistently elevated inflation will keep interest rates higher for longer,” says Basu. “ABC has been predicting this for months. With labor costs still rising, consumers spending aggressively, oil-producing nations limiting output and global supply chains being reorganized, there is reason to believe that future readings will also demonstrate excess inflation is here to stay.”
