Construction input prices went up by 3 percent between July 2016 and July this year, according to an analysis of federal data by the Associated Builders and Contractors.
In the month of July alone, input prices rose 0.3 percent. Prices for nonresidential construction inputs, considered by themselves, were also up by 0.3 percent for the month and by 2.7 percent for the year.
Anirban Basu, chief economist of the ABC, said that even though the prices are on the rise, there is nothing in the report that would suggest the industry is seeing what he deemed “rampant inflation.”
“Despite recently completing eight years of economic recovery and hurtling towards full employment, the Federal Reserve’s most intensely scrutinized measure of inflation remains well below 2 percent,” Basu said in a statement. “Even worker compensation has not risen rapidly, despite indications by construction firms, trucking enterprises, hotel operators and manufacturers of large-scale shortfalls in human capital.”
Basu noted the lack of inflation helps explain why interest rates remain low, home prices are rising and commercial real-estate values are high.
“The reasonably strong performance of the U.S. economy and the phenomenal performance of financial markets is largely traceable to surprisingly low inflation,” he said.
Of the 11 key inputs that are tracked by the ABC, eight saw their prices rise in July, according to the analysis. The inputs with declining prices included crude petroleum, which was down 8 percent, and natural gas, down 7 percent.