Ceramic tile register surprising price increase

There has not been a sustained increase in prices for ceramic floor and wall tile products for several years. Product prices have declined, on an annual average basis of measure, during three of the past four years, including a sharp 7.4% plunge from 2000 to 2001. Thus, it is surprising that the U.S. Labor Department's price index for the whole variety of ceramic floor and wall tile products increased every month during the second quarter of this year, after showing little net change from December 2001 to March 2002. The 0.7% average price increase recorded during June followed gains of 0.8% in May and 0.4% in April.

Because of the sharp declines registered in average prices throughout the fourth quarter of 2001, the price index for ceramic tile products remained much lower this June than at the same time last year. Despite the recent increases, average prices received by U.S. tile manufacturers this June were 17.4% lower than in June 2001.

The full-year decline will be less dramatic, with a 5% drop in average prices from 2001 to 2002. But there is little prospect that the recent price gains will be sustained during the second half of 2002 unless the building construction market turns in an unexpectedly gangbuster performance for the remainder of the year. However, there is one wild card: Because so much ceramic tile comes from outside the nation, a continued decline in the value of the U.S. dollar would raise the price of imported products and give U.S. tile manufacturers cover to pass along comparable price increases, even in a weakening market.