On the other hand, inflation measured by contractor selling price indexes, which reflect the competitive conditions of the marketplace, show an annual increase of just 0.8% this quarter. This is down from a 2.5% annual inflation rate measured by this group of indexes in the same quarter of 2001.
The relatively wide 1.7% spread between indexes that measure input costs and selling price is a strong indication of how deeply contractors are trimming margins to stay competitive. A year ago, when the market was rosy, there was no gap between the two types of indexes.