Home » Construction materials cost inflation continues to cool, but prices remain high

Construction materials cost inflation continues to cool, but prices remain high

Published: 14/09/2023

Construction materials prices for all work fell by 4.0% in the 12 months to July 2023, according to new figures from the Department of Business & Trade. This was compared to a drop of 2.0% in the year to June 2023.

In New Housing, the change on the year was -1.5% and in Repair and Maintenance it was -4.3%.

Source: Department for Business & Trade - Monthly Bulletin of Building Materials and Components

Although the DBT Monthly Bulletin of Building Materials and Components reflects continued cooling in materials cost inflation, there is disparity between materials, and therefore for different trades.

Metal doors and windows, ready-mixed concrete and insulation were among the materials in the index showing more than 10% annual growth in the year to July (22.7%, 20.5% and 19.7% respectively), showing some material costs are still rising significantly.

Source: Department for Business & Trade -Monthly Bulletin of Building Materials and Components

* The Office for National Statistics state that these Indices are based on relatively few quotes and in the long term should not be relied upon for contractual purposes.

** DBT reports these index values are considered less reliable, mainly due to lack of market coverage

While annual growth on materials like structural steel has decreased, prices remain historically high.

The below graph, showing the BCIS Price Adjustment Formulae Index for structural steelwork materials, demonstrates both the steep rise in the cost of steel, peaking in April 2022, but also that, despite a steep decline since, prices remain high.

Source: BCIS Price Adjustment Formulae Indices 4/CE/ST/02 Structural Steelwork Materials #4642

BCIS Chief Data Officer, Karl Horton, said: ‘With the slowdown in activity and continued contraction of output in the industry, the overall easing of materials costs will likely continue.

‘Having said that, there is clearly significant disparity between materials, which means different projects, depending on the cost weighting of different products utilised, will be affected to varying degrees by price changes.

‘Labour has increasingly been driving project costs as shortages in the workforce and workers’ demands for higher rates of pay have taken effect, but these figures show that accurate cost planning across the board is crucial.’

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Price Adjustment Formulae Indices online (PAFI)

This tool provides a comprehensive, detailed and easy to use method of measuring cost movement for building and civil engineering. Widely used in the construction and infrastructure sector to help fairly allocate risk between the client and sub-contractors.

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