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The number of construction companies reporting higher than normal cost increases has reached a new high, as of the end of May, according to data from the Office for National Statistics (ONS).
The Construction Index reports that continuing material shortages caused by supply chain disruptions are pushing up prices, and 44 per cent of construction firms surveyed by ONS said that in the two weeks to 30 May, they had seen costs increase more than normal, which is the highest number recorded since ONS began its survey at the start of the pandemic in 2020.
Over a quarter (26 per cent) of the 750 firms quizzed by ONS reported that prices had not increased more than usual, and less than five per cent said some prices has increased while others had fallen, but there was no reporting of a majority of prices falling.
Professor Noble Francis, the Construction Products Association economics director, said that while the ONS data was volatile, there was a clear trend of rising costs over the past nine months.
He said that imported materials were seeing the highest inflation in prices, adding: “It is a combination of a sharp recovery in domestic construction demand, rapid recovery in global construction demand and a sharp rise in shipping costs plus some product-specific issues, such as a warmer winter affecting timber production in Scandinavia.”
Imported materials take up around a quarter of all materials used in UK construction, and while some, such as steel and timber, have seen inflation in double figures, domestically produced materials have seen less drastic cost increases, according to Professor Francis.
“The labour element and domestic construction products dominate construction costs, so inflation there [on projects] is much more likely to be high single-digit,” he said.
Material cost inflation due to shortages has been a growing problem in recent months. Steel, timber, cement, aggregates, plastic and roof tiles are among the products that have been on the Construction Leadership Council’s list of products facing supply constraints.
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