The ‘All work’ Construction Materials Price Index from the DBT ‘Monthly statistics of building materials and components’ continues stabilising, with little movement in recent months.

Prices remain significantly elevated compared to pre-pandemic levels, with the DBT ‘All work’ Construction Materials Price Index showing a 37.9% increase between February 2020 and February 2024.

The index peaked in July 2022. Figure 47, which uses data from the DBT and the ONS, shows that while significant reductions occurred between July 2022 and February 2024 for materials, including fabricated structural steel, concrete reinforcing bars and filling materials, other products saw increases.

Increases are generally more predictable and less volatile and availability is good for most products and materials. Lead-in times have also improved, with only a few specialised materials still subject to long wait times.

Just over one in five respondents to our 2Q 2024 survey said their projects experienced impacts from conflicts, including Ukraine, Gaza and Houthi Red Sea attacks, in 1Q 2024. Issues reported included higher shipping costs and slower delivery times.

The Construction Leadership Council's (CLC) Material Supply Chain Group eased fears with its March statement, noting that impacts on products transported via the Red Sea have dissipated or are manageable. It said, "Although some are experiencing increased shipping costs and slight delays in delivery of ironmongery and sanitaryware this is now described as an 'inconvenience', and not a major issue."

The statement also cautioned that there is growing restlessness in the electro-technical sector, where ongoing geopolitical risks in East Asia could potentially impact construction products, plant and tools with chips from that region.

Elsewhere in the building services sector, there are fears that prices of ventilation products could fall victim to price hikes if the sale of the second largest supplier to the market leader for circular ducts and fittings is approved. A Construction Enquirer article advised that the Competition and Markets Authority has completed phase 1 of its review and that the companies compete closely to supply customers. The impact would be felt from installers through to to clients of commercial building projects.

With ONS data showing that construction output in the residential sector remains conservative and expectations that it will remain flat for the year, material prices are unlikely to come under pressure from demand. The CLC observed that prices have generally increased by 3% to 4%, which aligns with consumer price inflation.