There is only one topic on everyone’s lips at the moment, inflation. With numbers reaching historic levels of over 25% we want to look at the impact this is having across the construction industry and how you can mitigate it. With 2022 already plagued by material shortages in the early part of the year and fuel repeatedly hitting record highs, the continuing rise of inflation has seen businesses facing real challenges.
Over the last 18 months we’ve seen prices continue to rise on materials due to lengthening lead times and growing demand. This has made it increasingly difficult for manufacturers and suppliers to build up stock levels. Factor in the impact of the war in Ukraine and the direct impact on material costs as both Russia and Ukraine are critical suppliers of metals, raw materials, chemical products and machinery and we are seeing an extended period of economic uncertainty.
Availability has improved since the beginning of the year. We are still seeing some availability issues on products such as bricks and blocks but timber and chipboard have seen significant improvement as the market becomes more adept at managing supply.
Average energy bills rose by 54% in April, which is putting pressure on construction firms due to energy intensive industries including concrete, steel and cement passing on the impact of higher prices. The increase in the price of raw materials in March was the highest in six months.
So how can you avoid falling victim to soaring inflation?
Manage expectations: It is important to discuss the details and potential pressures that might lie ahead in delivery ahead of time. Don’t tie your quotes to current prices. Show the cost of labour and materials separately, ensure that the customer is aware that prices on materials are likely to change and they will pay the cost on ordering.
Consider your options: Are there any alternative approaches you could take to reduce your exposure to risk but still provide you with the same results?
Plan ahead as best you can: The continued rise of material costs does not look likely to peak any time soon. With that in mind you need to order at your earliest opportunity to limit the chance of future cost inflation.
We understand that these are difficult times and that you’re likely doing all of the above as much as possible already. At Buttle’s we will support you by continuing to offer the best possible price for your materials and offering you clear and honest advice.