Con Dig (28-Sep-26) — Rising construction material and fuel costs are putting fresh pressure on US project budgets, with federal data showing sharp increases in diesel and key metals while contractors report projects being postponed, scaled back or cancelled.
The producer price index for inputs to new nonresidential construction increased 8.9% between August 2025 and August 2026, according to an analysis by the Associated General Contractors of America of US Bureau of Labor Statistics data.
AGC said prices for aluminum mill shapes rose 27.3% year on year, steel mill products increased 23.4% and copper and brass mill shapes climbed 20.9%. Liquid asphalt prices were 16.4% higher.
Fuel costs have added another layer of pressure. BLS said producer prices for diesel fuel jumped 24.1% in August alone. The US Energy Information Administration’s latest weekly survey put the average US on-highway diesel price at $6.529 per gallon on September 21, up from $6.285 a week earlier.
AGC said 55% of respondents to a recent contractor survey had experienced projects being cancelled, postponed or scaled back during the previous six months. One-third of respondents attributed the disruption to increasing costs.
The association attributed much of the recent increase in construction input costs to higher petroleum and metals prices, and said tariffs and the Middle East conflict were contributing factors.
The pressure is becoming visible in individual developments. Georgia-Pacific said earlier this month that it had discontinued plans for a major mixed-use redevelopment of its 51-story Atlanta headquarters after higher construction costs and broader market headwinds changed the project’s economic viability. The proposal had included around 400 apartments as well as retail, entertainment and public-space components.
The latest figures suggest materials and energy costs will remain an important factor for contractors and developers assessing project budgets, bids and whether planned developments remain economically viable.
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