US construction materials inflation at six-year low

Prices for materials and other inputs into the US construction industry rose at their slowest rate since 2002 last year. According to figures from The Associated General Contractors of America (AGC), industry prices increased +2.7% last year.

Inflation for construction materials most recently peaked at +9.1% in 2004 and prices went up another +8.2% in 2005. More subdued rises of +4.6% and 4.8% were seen in 2006 and 2007, but these were still above the prevailing consumer price inflation figures of +2.5% and +4.1% in the US at the time.

The marked slowdown in construction inflation last year included a sharp fall in prices in the final quarter. According to the AGC's figures, input prices for the industry fell -8.3% in the final quarter of 2008.

The falling oil price was a major contributor to this fall in costs in the construction industry. This included a near halving of the cost of diesel in the last quarter of 2008, along with a -44% decline in the cost of raw asphalt and a double-digit drop in the cost of asphalt paving mixtures. However, over the year as a whole the cost of raw asphalt was up +48.3% and some related products like roofing membranes and tars rose +50% or more.

There was also an across-the-board fall in the cost of metallic construction products. Basic aluminium, copper and steel mill sections all fell around -25% in price in the final quarter. However, decline in cost for the fabricated metallic products used in construction such as pipes, structural steel, sheet products and decorative ironmongery was in single-digit territory. However, prices were generally up - in some cases quite sharply - for 2008 as a whole.

The price of concrete products was fairly flat across the board in the final quarter of the year. Over 2008 as a whole, their cost rose between +4% and +5%.