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Summary: Inflation Batters Building Costs

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Preliminary data indicate that inflation has not yet peaked, with several indexes already breaching the double-digit barrier. ENR’s Building Cost Index rose from a 9.0% annual rate in July to 10.4% in September. Marshall & Swift predicts inflation tracked by its index will climb from 10.4% in July to 11.5% by October, while Boeckh sees its index going from 6.2% to 8.5% during the same period. The annual rate of increase for the SmithGroup’s index went from 7.6% in July to 8.3% in August.

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broad-based surge in materials price escalation is ripping through construction industry cost indexes. As a result, annual inflation has risen from 2.3% a year ago to 3.2% in the first quarter, 5.6% in the second quarter and 8.1% currently. This is according to a tally of 14 major cost indexes through last July, the latest month available for all indexes.