Forecasts from a leading national construction trade body reveal that inflation will have a significant impact on the industry throughout 2022.

The Builders Merchants Federation (BMF) says there is growing uncertainty in the supply chain, stemming from rising energy prices, with the situation escalating due to the outbreak of war in Ukraine.

The analysis, in the BMF’s latest Forecast Report, points to an annual builders’ merchants sales growth of 6.1% in 2022, but cautions that the majority of this will be due to price inflation rather than increased volumes.

Sarup Ubhi, BMF Industry Analyst/Economist, said: “It was initially anticipated that material price inflation would ease throughout 2022, with the past 12 months having been dominated by material availability and increasing inflationary pressures.

“However, an extended conflict in Ukraine increases the potential for inflationary pressures to persist throughout 2022.

“The main effect of the conflict on building material supply is increasing energy and raw material costs.

The cost of steel, cement, glass, and other energy intensive products are all expected to increase again due to the energy crisis.

“Raw material prices are also rising. We saw the increase in March 2022 reach its highest point in the last six months, and this could further constrain the availability of certain products.

“It is unlikely that manufacturers will be able to fully absorb these price rises and, as a result, cost increases are expected to be implemented at every level of the supply chain.”

 

The BMF forecast combines a comprehensive analysis of merchant market performance from July 2014 to December 2021, taken from the Builders Merchants Building Index (BMBI), coupled with analysis of key factors affecting builders’ merchants’ sales to project future sales in 2022.