Commodity price inflation is increasing job site delivered costs

March 01, 2006 |

Rapid inflation in construction commodities, such as gravel and cement, resumed last September after remaining virtually unchanged for a year. Hurricane supply losses and subsequent reconstruction work are largely responsible for the return of inflation. That impact is now waning, so price increases at the commodity level will slow to 3–4% between 2006–07, only slightly higher than overall inflation.

Cost increases for processed or manufactured products delivered to the job site trail the trends found at the commodity price level. Higher inflation last year for processed and manufactured construction materials reflects commodity price surges from late 2004 through mid-2005. Similarly, recent modest price increases at the job site level reflect the halt in commodity price inflation that ended last August. Looking ahead, inflation for processed and manufactured materials is forecast to increase the first part of this year as the impact from last year's hurricanes continues to be felt, and then become markedly slower through 2007.

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