After cruising along in the 1.5 to 3% range for several years, inflation measured by ENR’s two cost indexes received quite a jolt in recent months. At the beginning of the year, inflation measured by the Building Cost Index (BCI) was 3.2%. By the end of the first quarter that rate had jumped to 5.8%. During the same period, the annual rate of increase for the Construction Cost Index (CCI) went from 3.3 to 5.0%.The mechanics of what drives ENR’s indexes are explained below.

ENR began systematically reporting materials prices and wages in 1909, but it did not establish the CCI until 1921. The index was designed as a general purpose tool to chart basic cost trends. It remains today as a weighted aggregate index of the prices of constant quantities of structural steel, portland cement, lumber and common labor. This hypothetical package of construction goods was valued at $100 using 1913 prices.