Construction Input Costs Up 7.4% Year Over Year, More Hikes Coming

Construction Input Costs Up 7.4% Year Over Year, More Hikes Coming

Construction input prices climbed 7.4% year over year in July, even as the monthly increase held to just 0.1%, Construction Dive reports, citing an Associated Builders and Contractors analysis of new U.S. Bureau of Labor Statistics data. ABC chief economist Anirban Basu said the muted monthly figure was driven by a temporary dip in fuel prices, including an 11.9% drop in crude petroleum and a 7.4% decline in unprocessed energy materials. Natural gas prices moved the opposite direction, up 10.4% in the same span. Basu warned the calm won’t last: diesel prices have already jumped more than 50 cents per gallon since the index was measured, and lumber and iron and steel prices are still climbing. Separately, the Associated General Contractors of America flagged tariffs on aluminum mill shapes and copper, plus lumber and plywood, as hitting some of their fastest price increases in years. AGC chief economist Ken Simonson said firms face cost pressure on materials and labor alike, and warned that without tariff relief or added infrastructure funding, both private and public construction work could see cutbacks.

What It Means for Subcontractors

• Bake a 7.4% year-over-year materials escalation into new bids now, with lumber, iron, steel, and diesel fuel flagged by ABC as still rising, not leveling off.
• Subs on metals-heavy scopes (E&I, mechanical, structural steel) should price in tariff-driven cost swings on aluminum and copper called out by AGC, since these have hit multiyear highs.
• Firms bidding public infrastructure work should factor in AGC’s warning that highway and transit projects could face cutbacks absent new funding or tariff relief, making early pricing certainty on those contracts less reliable.