Price inflation ‘stable’ but subbies still under pressure, experts warn

timber stack

Price inflation has stabilised across the industry, according to the Construction Leadership Council (CLC) product availability group.

However, smaller firms especially should still expect to feel the squeeze for some time, it added.

In its latest statement the body said that most material availability has now returned to pre-Covid levels, with only semi-conductors causing concern during September.

The statement, jointly written by Builders Merchants Federation (BMF) chief executive John Newcomb and Construction Products Association chief executive Peter Caplehorn, said that price inflation had now stabilised, with product price rises now capped at 1-2 per cent compared with more than 5 per cent a year ago.

The price of timber and “some plastic and energy-intensive products” is now falling, they said.

“This is largely due to a stagnation of demand, particularly the ongoing decline in housebuilding activity over the last six months. Poor weather and strikes in July and the August holiday period also contributed to a slowdown in activity over the summer.”

The downturn in activity, highlighted earlier this month by Glenigan and the Office for National Statistics, was confirmed by other BMF data this week.

The latest Builders Merchant Building Index shows merchants’ value sales were down 0.4 per cent in July compared with the same month in 2022, as volumes fell by 7.9 per cent.

Prices were up by 8.1 per cent year-on-year, showing the extent to which inflation is still dogging the industry.

On a month-on-month basis, prices rose by 2.2. per cent, with volume sales down by 7.5 per cent.

Despite the easing of inflation, Newcomb and Caplehorn warned: “Although there are signs of improvement in some regions in September, the key economic drivers – inflation, increased cost-of-living and higher interest rates – will remain a significant challenge for construction output for the rest of the year.”

They added that commercial behaviour was “likely to harden” and put more pressure on lower-tier and SME contractors, reducing cashflow capacity and making liquidity a “greater challenge”.

Tagged with: bmf CLC inflation materials prices

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