According to The Bureau of Labor Statistics, the Producer Price Index (PPI) for materials and components used in construction were up 0.2% in March from February and up 3.1% from March 2011. Raw materials prices used in construction or to produce products used in construction gained 0.4% in March after a previous 0.7% monthly increase and increased 3% y-o-y.

The index for nonresidential construction input costs rose 1.6% in March following a 0.8% increase in February driven by high energy cost.

Reed Construction Data forecast that construction activity will rise, resulting in “modest upward pressure on construction materials prices. As the economy advances at a moderate pace, prices will move roughly in line with general inflation. Faster than projected sustained economic growth (3% or higher at an annual rate) will accelerate commercial construction activity and push materials price inflation higher than general inflation. This seems unlikely to happen before the second half of 2012.” RCD stresses the risk of rising energy and oil prices as the biggest risk to materials price inflation and the economy.

Sources: The Bureau of Labor Statistics & Reed Construction Data