In 2004 and 2005, construction materials costs have been highly volatile, with much more inflation on the whole than in previous years. This contrasts with overall inflation measures such as the consumer price index (CPI) and the producer price index (PPI) for finished goods, which have shown little volatility or acceleration aside from energy-related costs. (See AGC's Construction Inflation Alert at www.agc.org for documentation of construction and overall price changes in 2001-2005.) Fast-rising materials costs contrast as well with the small rise in wages.
What should contractors and owners expect for 2006? This report discusses the forces influencing several of the major construction inputs as of November 2005. Because projects differ so much in the mix of materials they use and when those items will be purchased, it is not realistic to provide a single estimate for construction inflation. But this report should give interested parties a chance to assess the likely range of price changes they will encounter.