Construction input prices decreased 0.6 percent in December compared to the previous month, according to an Associated Builders & Contractors (ABC) analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data.
Overall construction input prices are 1.2 percent higher than a year ago, while nonresidential construction input prices are 1.6 percent higher in that time, but were down 0.4 percent in December.
Prices decreased in two of the three energy subcategories last month. Crude petroleum input prices were down 13.2 percent, while unprocessed energy materials were down 9.1 percent. Natural gas prices rose 1.5 percent in December.
“Construction input prices fell sharply in December,” says Anirban Basu, ABC’s chief economist. “While plunging oil prices are the primary factor behind the sharp decline, most input prices were tame in 2023’s final month. That serves as a fitting end to a year during which aggregate input prices increased just 1.2 percent and many individual commodity prices actually fell.”
Basu adds that while there have been positive developments regarding inflation, the outlook on input prices still has its risks.
“Piracy in the Red Sea and the resulting diversion of ships from the Suez Canal around the Cape of Good Hope has caused global freight rates to nearly double in the first two weeks of 2024, according to the Freightos Baltic Index,” he says. “All else equal, rising shipping costs will put upward pressure on certain inputs.”
