Con Dig (13-Feb-25) Construction input prices saw a sharp increase in January, rising 1.4% from the previous month, according to an analysis by the Associated Builders and Contractors (ABC) of the latest U.S. Bureau of Labor Statistics’ Producer Price Index data. 

Prices for nonresidential construction inputs also climbed, albeit at a slightly lower rate of 0.9%.

Compared to a year ago, overall construction input prices are up 1.3%, while nonresidential construction inputs have risen 0.7%. The surge was largely driven by energy costs, with crude petroleum prices jumping 14.8% in January. Natural gas and unprocessed energy materials also saw double-digit increases, rising 13.7% and 13.0%, respectively.

ABC chief economist Anirban Basu attributed the rapid price escalation—marking the steepest monthly increase in two years—to three key factors: a spike in energy prices, routine price hikes by producers at the start of the year, and a rush by buyers to secure materials ahead of potential tariffs.

“Of these three factors, tariffs are the only one that could continue to push input prices higher in the coming months,” Basu noted. “Import taxes allow domestic producers to raise their prices, and the new 25% levies on steel and aluminum will result in just that if they remain in place.”

Despite rising costs, demand for construction remains strong. ABC’s Construction Confidence Index shows that a majority of contractors expect sales to increase over the next six months. However, ongoing supply chain uncertainties and growing demand for materials could further accelerate input price inflation through the first half of 2025.