Overall construction materials prices increased 0.4 percent in April and are up 1.5 percent year over year, according to the Producer Price Index released last week by the U.S. Department of Labor.
Nonresidential construction material prices were up 0.5 percent for the month and are 1.4 percent higher than the same time last year.
Construction materials prices have increased for five consecutive months, the longest streak in more than two years.
While some may interpret this increase as the onset of a period associated with significantly higher inflation, it seems more likely that the consistent uptick in prices is at least partially attributable to the colder-than-normal winter, which interrupted the usual flow of construction inputs. Nationally, construction spending has not been rising in recent months, which implies recent increases in materials prices are not a purely economic phenomenon.
Crude energy materials prices fell 3.3 percent in April, but are still 6.6 percent higher than one year ago. Natural gas prices decreased more than 10 percent for the second consecutive month. Overall, the nation’s wholesale goods prices expanded 0.7 percent in April and are up 3.1 percent year over year.
The nationwide surge in prices is almost entirely attributable to food prices, which increased 2.7 percent in April alone. Any crops that weren’t damaged by the harsh winter are now struggling to survive through a drought affecting large portions of the western United States.
The following materials prices increased in April:
- Concrete products prices expanded 0.6 percent in April and are up 3.4 percent on a year-over-year basis.
- Iron and steel prices increased 1.5 percent in April and are up 3.2 percent compared to the same time last year.
- Steel mill products prices rose 1.1 percent for the month and are 2.2 percent higher than one year ago.
- Crude petroleum prices increased 0.6 percent in April and are up 5.4 percent compared to April 2013.
- Prices for plumbing fixtures expanded 0.4 percent for the month and are up 2.3 percent on a year-over-year basis.
- Fabricated structural metal product prices rose 0.3 percent on a monthly basis and 0.9 percent on an annual basis.
Five of the 11 key construction inputs did not experience price increases for the month.
- Nonferrous wire and cable prices decreased 1.8 percent on a monthly basis and are 3.8 percent lower than in April 2013.
- Prices for prepared asphalt, tar roofing and siding declined 2.2 percent for the month and are down 4.6 percent on a year-over-year basis.
- Softwood lumber prices fell 2.5 percent and are 8.3 percent lower than one year ago.
- Natural gas prices fell 12 percent in April but are 15.1 percent higher than in April 2013.
- Crude energy prices declined 3.3 percent in April, but are 6.6 percent higher year over year.
Anirban Basu is chief economist of the Associated Builders and Contractors.