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Construction Materials Hit By High Inflation

November 23rd, 2006


Inflation costs continue to plague construction materials, despite a downturn in the rest of the economy in September, according to The Associated General Contractors of America.

“Inflation took a vacation in September for most of the economy but remains a problem for construction materials,” said Ken Simonson, Chief Economist for AGC, in a news release referring to the Producer Price Index.


Simonson cited falling petroleum prices in driving down the overall PPI, but noted that the PPI for construction materials and components remained “moderate.”


“I expect contractors to get good news for the next few months relative to the artificially high post-hurricane prices of last autumn,” Simonson added. “Also, the steep drop in home construction will drive down prices for gypsum wallboard, which will help nonresidential building contractors.”


Other key issues Simonson noted include:


Bullet Arrow Construction industry’s reliance on a fixed quantity of materials with no available substitutions
Bullet Arrow The high cost in freight and fuel in delivery construction materials
Bullet Arrow
Falling diesel prices are helping contractors
Bullet Arrow A predicted 6 percent to 8 percent rise in construction material costs in 2007







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