Inflation is stabilising but energy prices 'extremely volatile', CLC says

28/07/2022 | DOMINIC BROWNE

Inflation has stabilised in the construction sector but is likely to 'persist at a lower level' for the rest of the year, according to a top industry body.

The Construction Leadership Council put out a statement this week giving a moderately positive outlook on the current economic situation, however, it also noted 'extreme volatility' in energy prices.

While many UK manufacturers purchase energy on forward contracts to help manage risk, some firms are experiencing electricity costs fluctuating 'by up to 300% on a day-to-day basis, which may affect the financial viability of some energy-intensive manufacturing during the winter months'.

The CLC said: 'With one or two exceptions, general product availability continues to improve across all categories and all regions, with the exception of Northern Ireland where separate issues are affecting the transport of goods.

'Very high levels of inflation exacerbated by the Ukraine conflict have stabilised. Softening demand, particularly at the retail end of the market, has led price inflation to moderate for some products, although this is unlikely to result in lower project costs in the short term. The general view is that inflation will persist at a lower level across most product categories for the rest of the year.'

The statement came from co-chairs of the Construction Leadership Council’s Product Availability working group John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association.

They also note that transport issues continue to affect imported products with some major merchants suggesting that only 25% of goods from the far east arrive on time.

'Container costs also remain at high levels, and reduced capacity on many shipping routes is likely to have the effect of sustaining high prices,' it states.

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