Crude petroleum prices jumped 8.9% in August compared to July and are up 66% since February 2020, according to the Associated Builders and Contractors. Prices for diesel fuel jumped 34.6% between mid-July and mid-August, the largest one-month jump since 1990, according to Associated General Contractors, and have risen 77 cents in the past 10 weeks.
Construction equipment prices are 27% higher than February 2020, although prices declined 0.5% in August, according to ABC. Analysis by ABC showed an overall price increase in construction inputs of 1.5% for the month.
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“Anyone who thought that excess inflation would simply go away later this year has been rudely awakened this week,” said Anirban Basu, chief economist, in a statement. “[This week’s] consumer price data and…PPI release indicate that price growth continues to be problematic. While energy prices will grab headlines, items like concrete and switchgear also exhibited inflationary tendencies in August.
“There are many implications for construction contractors, including the fact that persistently elevated inflation will keep interest rates higher for longer,” said Basu. “ABC has been predicting this for months. With labor costs still rising, consumers spending aggressively, oil-producing nations limiting output, and global supply chains being reorganized, there is reason to believe that future readings will also demonstrate excess inflation is here to stay.”
