A surge in fuel costs pushed the building materials index higher, dashing hopes of cooling inflation.

Worker prepare to lift a new pedestrian bridge into place at the Stamford Transportation Center on Aug. 26, 2023 in Stamford, Connecticut. John Moore/Getty Images via Getty Images
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An extreme jump in diesel fuel costs in August drove the overall increase in materials prices, according to a separate analysis from the Associated General Contractors of America.

Most other commodity prices remained relatively unchanged, according to AGC officials.

“The steep climb in diesel prices since July is a reminder that construction cost worries have not gone away,” said Ken Simonson, AGC chief economist. “An even greater challenge for most contractors is finding enough qualified workers to complete the many projects available to work on.”

The producer price index for diesel fuel, which covers the selling price at the terminal rack or refinery, ballooned 34.6% in August — the largest one-month jump since 1990 — according to AGC. Simonson added retail diesel prices have continued rising since then and have climbed 77 cents per gallon in the past 10 weeks.

Nevertheless, Basu said while energy prices will likely grab headlines, materials like concrete and switchgear also continued to exhibit 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,” said Basu. “ABC has been predicting this for months.”

Prices for concrete products increased 0.5% in August, making them 8.7% higher on the year. Meanwhile, prices for switchgear equipment moved up 0.4% in August, and were 6.7% higher than a year ago.

“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,” said Basu.


Source: https://www.constructiondive.com/news/material-price-construction-cost-august/693735/