The UK construction industry is facing the highest material costs in a decade
19 November 2024What is the Construction Materials Price Index?
Official definition: Construction Material Price Indices (CMPIs) give a measure of the notional trend of input costs to a contractor in terms of changes in the cost of building materials, i.e. factory gate prices charged by materials manufacturers.
The indices do not take into account current market conditions experienced by a contractor on a particular project purchasing from sub-contractors, merchants or factors (i.e. materials discounts or premiums paid for material resources in short supply).
Source and for more information on the Construction Materials Price Index Scale: Department for Building & Trade
- The price of concrete reinforcing bars increased by almost 38% just in 2022 (Statista, May 2023)
- Gas and electricity prices rose 36.2% and 17.3%, respectively in the year to June 2023, and have been one of the largest contributions to the overall inflation rate since April 2022 (Office for National Statistics, July 2023)
- Structural steel increased by 52.6% in 2021 (Statista, May 2023)
- According to construction industry experts, steel, concrete and wood currently are among the most sought-after materials (Built, The Blue Beam Blog, July 2022)
- Ukraine and Russia were two of the biggest steel exporters in the world (Built, The Blue Beam Blog, July 2022)
- Timber and Joinery index has plateaued The supply of timber has recovered from the disturbances in early 2021 and has slowed down the price of the material and was forecast to fall between 2023-24 (IBIS World, April, 2023)
- Subsequent to, and consequent of, the EU referendum result, political and market uncertainties ensued and, in turn, currency and commodity market traders lost confidence in the UK economy; the trade-weighted value of the pound sterling depreciated sharply as a result, and since remained depressed against historical standards (IBIS World, April 2023)
Using the data collected from Gov.UK we have found the average index level for each of the main categories to compare month on month along with year-on-year changes. Here is what is included in each category:
% Change year on year of the Price Indices of Construction Materials - Annual Averages
| % change | 2015-16 | 2016-17 | 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| Aggregates | -0.65 | 0.25 | 1.91 | 9.31 | 2.12 | 4.24 | 20.53 |
| Cement & Concrete | -0.2 | 4.51 | 3.15 | 0.72 | -1.22 | 15.81 | 25.55 |
| Timber & Joinery | -0.1 | 7.96 | 11.08 | -2.25 | -2.97 | 35.05 | 8.29 |
| Metal Products | 1.3 | 4.52 | 2.69 | 3.34 | 0.38 | 8.64 | 14.59 |
| Plastic Products | 0.85 | 1.96 | 2.99 | 2.97 | 2.89 | 6.62 | 13.77 |
| Other materials | 0.53 | 2.09 | 6.24 | 0.7 | 1.18 | 2.46 | 14.97 |
Source: Price Indices of Construction Materials – annual averages, May 2023 & December 2021
In 2017 and 2018 the indices of Aggregates fell because the Gravel, Sand, Clays & Kaolin – incl Aggregate Levy statistic was confidential and therefore was not included in the total. It should be dismissed in looking at the biggest changes. Changes between 2019 and 2022 are more comparable.
Over the past 5 years, it is between 2020-2022 where there has been a gradual to substantial increase in the indices of the construction materials. The biggest changes are in Timber and Joinery in 2020/21 at 35.05%. All other materials have had their biggest spike in between 2021-22 with Cement and Concrete (25.55%) and Aggregates (20.53%) having the highest jump in indices.
% change of the Price Indices of Construction Materials, January 2020 compared to January 2023
Source: Price Indices of Construction Materials - Monthly, May 2023
The graphic above shows the Construction Materials indices prior to Covid of January 2020 directly compared to the same month 3 years later as well as the latest data released by the Department for Building & Trade.
Note: Before 2020 the indices were collected with different subcategories in particular with Aggregates. Therefore, in order to keep consistency, we have used the data that was all collected the same way.
You will notice that the biggest increase is from the Cement and Concrete materials with a 49.29% increase between Jan 2020 and Jan 2023. On average there was an increase in construction materials index by 36% between Jan 2020 and Jan 2023.
The latest data shows that price indices are continuing to increase since January of 2023 on average by 2.33% with the last year showing a 7.03 increase average.
Sources
Construction Material Price Indices Methodology, Department for Building & Trade, June 2023: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1167112/construction-material-price-indices-methodology_June_2023.pdf
Building Materials and Components statistics, Department for Building & Trade, June 2023: https://www.data.gov.uk/dataset/75ee36ed-21f7-4d7b-9e7c-f5bf4546145d/building-materials-and-components-statistics
Monthly Statistics of Building Materials and Components, Department for Building & Trade, April 2023: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1157641/23-cs5-_Construction_Building_Materials_-_Commentary_April_2023.pdf
Consumer Price Inflation UK, Office for National Statistics, June 2023: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/june2023
Timeline of UK government coronavirus lockdowns and measures March 2020 to December 2021, Institute for Government, December 2022: https://www.instituteforgovernment.org.uk/sites/default/files/2022-12/timeline-coronavirus-lockdown-december-2021.pdf
Coronavirus (COVID-19) Infection Survey Technical Article: waves and lags of Covid-19 in England, Office for National Statistics, June 2021: https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/conditionsanddiseases/articles/coronaviruscovid19infectionsurveytechnicalarticle/wavesandlagsofcovid19inenglandjune2021
Prime Minister sets out plan for living with COVID, Gov.UK, February 2022: https://www.gov.uk/government/news/prime-minister-sets-out-plan-for-living-with-covid#:~:text=The%20Prime%20Minister%20has%20today,requirement%20to%20self%2Disolate%20ends
Annual change of the price for building materials and fixtures in the United Kingdom from 2019 to 2022 by type, Statista, May 2023: https://www.statista.com/statistics/1308302/building-materials-price-index-in-the-uk-by-type/
Construction Materials Price Index, IBIS World, April 2023: https://www.ibisworld.com/uk/bed/construction-materials-price-index/44255/
The Most In-Demand Construction Materials Right Now, Built - The Blue Beam Blog, July 2022: https://blog.bluebeam.com/most-in-demand-construction-materials/
The Impact of Brexit on the Construction Industry, Build Safe, Janurary 2022: https://buildsafe.co.uk/the-impact-of-brexit-on-the-construction-industry/
How has UK construction performed over the pandemic?, Office for National Statistics, October 2021: https://blog.ons.gov.uk/2021/10/19/how-has-uk-construction-performed-over-the-pandemic/
Steel materials prices surge as impact of Ukraine war bites, Building, May 2022: https://www.building.co.uk/news/steel-materials-prices-surge-as-impact-of-ukraine-war-bites/5117546.article
Brexit timeline: events leading to the UK’s exit from the European Union, UK Parliament, Jan2021: https://commonslibrary.parliament.uk/research-briefings/cbp-7960/
How inflation impacts the building industry, Builders' Merchants News, April 2023: https://www.buildersmerchantsnews.co.uk/How-inflation-impacts-the-building-industry/56485#:~:text=Construction%20inflation%20rose%20sharply%20at,building%20industry%20weathered%20the%20storm
Timber Price Index, IBIS World, April 2023: https://www.ibisworld.com/uk/bed/timber-price-index/44235/#:~:text=However%2C%20despite%20record%20high%20price,2%25%20in%20the%20latter%20year
Cost of living insights: Energy, Office for National Statistics, July 2023: https://www.ons.gov.uk/economy/inflationandpriceindices/articles/costoflivinginsights/energy#:~:text=Household%20energy%20prices%20continues%20to,inflation%20rate%20since%20April%202022
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