February’s Producer Price Index shows a 0.1% increase in prices for construction machinery and equipment compared to January, according to Associated Builders and Contractors. Prices for construction equipment were up 4.3% compared to February 2023 and 29.7% compared to February 2020.
Construction prices increased 1.4% for the month and 1.5% compared to February 2023. Crude petroleum was up 7.5% over January and 1.6% over February 2023. Compared to February 2020, crude prices are up 60.1%.
Article continues below table.
“For the last several weeks, inflation data have been coming in hotter than anticipated,” said Anirban Basu, ABC chief economist in a statement. “This was also true for the February construction input price data, which indicated that upward price pressures are reemerging after a period of calm. With supply chains around the world rattled by military conflicts and other phenomena and workers’ wages far higher than they once were, there is reason to believe that inflation will remain stubbornly high for months to come.
Read also: 2024 Prices Remain a Concern for Fleets
“For contractors, today’s release is bad news for at least two reasons,” said Basu. “First, higher input prices implicate lower demand for construction services all else equal. With project financing costs already elevated, project owners are less likely to move forward with construction work given already high and rising input costs.
“Second, recent inflation data render it more likely that interest rates will remain higher for longer. For weeks, the conventional wisdom has been that the Federal Reserve was poised to reduce interest rates. Today’s inflation data, along with other releases, suggest that hopes for rapidly declining rates were somewhat premature.”
