KEY POINTS
-
Construction material prices rose 11.0% year over year in September, according to the Bureau of Labor Statistics (BLS).
-
This is the fastest inflation rate for the Producer Price Index (PPI) for construction materials since May 2022.
-
The swelling material costs are coming alongside rising fuel and labor costs.
Construction material prices rose 11.0% year over year in September, according to the Bureau of Labor Statistics (BLS). This is the highest year-over-year percentage change in the Producer Price Index (PPI) for construction materials since May 2022.
The swelling material costs are coming alongside rising fuel and labor costs. In this construction economy environment, profit margins can shrink, especially if bid price growth continues to be outpaced by input prices.
Materials, Energy, and Labor Costs Rise in September
Rising energy costs have played a significant role in the uptick and have created a headwind for the industry. Continued disruptions to oil production, refining, and shipping in the Middle East and Russia have pushed oil prices around or above $100 a barrel for significant periods in 2026.
Higher oil prices have raised the costs of key downstream products, like diesel, which recently reached a record $6.51 a gallon in late September, according to AAA. As of mid-October, the national average diesel price is up over 70% year-over-year.
The producer price data follows an inflationary consumer price report on Wednesday, with the All Urban Consumers (CPI-U) increasing 3.7% in September, up from 3.4% in August.
Higher energy and diesel prices hurt construction margins by raising costs for jobsite operations, transportation, and production of energy-intensive materials.
Aluminum and Steel Post Double-Digit Inflation Over the Past Year
Two key energy-intensive construction materials, aluminum and steel, have both posted double-digit inflation over the past year:
-
The PPI for steel mill products rose 27.6% year over year in September, also the fastest pace since May 2022.
-
Inflation for aluminum mill products peaked at 53.6% in June before cooling to 25.2% in September.
Importantly, steel and aluminum imports have faced 50% tariffs since June 2025, limiting how much foreign supply can offset higher domestic prices.
Wages Pressure Profits
Wages are also adding to pressure on profit margins:
-
Weekly wages for nonsupervisory and production specialty trade contractors rose 5.3% year-over-year in August, according to the BLS.
-
This measure reflects continued growth in average hourly earnings as well as high average weekly hours worked.
Construction material prices rose 11.0% year over year in September, according to the Bureau of Labor Statistics (BLS). This is the fastest inflation rate for the Producer Price Index (PPI) for construction materials since May 2022. Image: ConstructConnect
Are Construction Bid Prices Catching Up with Rising Material and Labor Costs?
ConstructConnect reported earlier this year that material and labor cost inflation was outpacing bid prices and squeezing margins in the industry.
In recent months, the gap has begun to close, with construction bid prices rising 5.4% year over year in September, according to the BLS.
September’s figure shows bid prices rising slightly faster than weekly wages. However, with materials still rising about twice as fast as bid prices, margins will likely continue to face pressure.
What Inflation Means for the Construction Economy
Construction material inflation has reached its highest level in more than four years, amid rising energy and wage costs. Bid prices are beginning to catch up, but firms still need to manage operational and material costs closely to protect profits.
In this environment, contractors may need to shift strategies by locking in material pricing, adding escalation clauses to bids, managing jobsite fuel usage, and preparing for higher delivery costs.
Stay Connected
Stay connected with ConstructConnect News for construction industry news and construction market analysis to stay ahead of what’s building next.
About ConstructConnect
At ConstructConnect, our software solutions provide the information that construction professionals need to start every project on a solid foundation. For more than 100 years, our keen insights and market intelligence have empowered commercial firms, building product manufacturers, trade contractors, and architects to make data-driven decisions, streamline preconstruction workflows, and maximize their productivity. Our newest offerings—including our comprehensive, AI-assisted software—help our clients find, bid on, and win more projects.
ConstructConnect operates as a business unit of Roper Technologies (Nasdaq: ROP), a constituent of the Nasdaq 100, S&P 500, and Fortune 1000.
For more information, visit constructconnect.com
