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Summary: Inflation Batters Building Costs

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Insurance: Workers’ comp rates climb

Labor: Tackling the cost of drug use

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A broad-based surge in materials price escalation is ripping through construction industry cost indexes. As a result, annual inflation has risen from 2.3% a year ago to 3.2% in the first quarter, 5.6% in the second quarter and 8.1% currently. This is according to a tally of 14 major cost indexes through last July, the latest month available for all indexes.

Preliminary data indicate that inflation has not yet peaked, with several indexes already breaching the double-digit barrier. ENR’s Building Cost Index rose from a 9.0% annual rate in July to 10.4% in September. Marshall & Swift predicts inflation tracked by its index will climb from 10.4% in July to 11.5% by October, while Boeckh sees its index going from 6.2% to 8.5% during the same period. The annual rate of increase for the SmithGroup’s index went from 7.6% in July to 8.3% in August.

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