Construction material prices rose 1.5% in August and are down 0.2% on a year-over-year basis, according to Associated Builders and Contractors. Although prices fell again year over year, they still are 40.7% higher than in February 2020.
Nonresidential construction material prices also rose 1.5% from July to August and increased 0.2% compared with one year ago. Softwood lumber prices are down 18% year over year and down 4.4% from July to August. Iron and steel prices are down 10.3% year over year and up 0.3% for the month. Natural gas fell 6.3% from July to August and is up 27.9% since February 2020. Crude petroleum rose 8.9% for the month and is up 66.5% since February 2020.
“Anyone who thought that excess inflation would simply go away later this year has been rudely awakened this week,” said 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,” Basu continued. “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.”