The Construction Material Price Index (CMPI) is a graph that presents the price of construction materials used in the industry over a certain period of time. This helps to understand any changes and trends, as well as how material prices affect the overall costs of construction projects.

The CMPI offers price comparison of building materials by comparing current prices to the prices from a base year. It is a standardised measure used by contractors, developers and policymakers to make informed decisions when planning a construction project. Besides this, the CMPI is helpful on a wider scale, as it can indicate the state of the construction industry, as well as the general economy.

Analyse historical trends

The above graph presents the CMPI in the UK between 2002 to 2015, with 2010 as the base year. We discuss historical trends below based on economical events that caused fluctuations.

2002-2007: Growth before crisis

In the early 2000s, we saw steady growth in the price of construction materials for all work. This was likely due to economic expansion and a booming housing market, which led to increased demand and therefore a rise in prices.

2008-2013: Financial crisis and its aftermath

The global financial crisis of 2008 had a huge impact on the Construction Price Index. There was a decline in the cost of building materials, since there was less demand for construction work. The prices started to rise again from 2009 as part of a slow but steady economic recovery.

2014-2015: Post-crisis stabilisation

By 2015, the rate of increase in prices slowed and the construction statistics became more stable.

It’s important to consider historical trends when reviewing the Construction Materials Price Index as it is directly related to both domestic and global events. This is especially helpful for future projections, which we look at later.

Interpretation of current construction material price index

The CMPI above overlaps with the previous graph, covering the years 2010 to 2023. In this graph, 2015 is used as the base year. Below, we look at the economic situation across this time period.

2010-2019: Post-recession

After the 2008 financial crisis, there was a very gradual increase in the cost of building materials as the economy stabilised. People invested in new housing as well as repair and maintenance, which shows consistent yet not overwhelming demand.

2020-2023: COVID-19 pandemic

With the pandemic in 2020, the Construction Material Price Index shows significant volatility. This is because global lockdowns had a direct impact on supply chains, leading to a sharp increase in the price of construction materials. It’s also worth noting that repair and maintenance activities increased during this time, with people spending more time at home and therefore focusing on home improvement.

We analyse the latest data from 2023 in more detail below.

Present data

This Construction Price Index covers the years 2011 to 2023, but we are focusing on the trends in 2023.

When looking at the CMPI, there has been a significant increase in recent years compared to the base year of 2014. However, towards the end of 2023 we can see a slight reduction in the price of construction materials. New housing, repair and maintenance and other new work all had downward trends from August to December 2023.

It’s also helpful to compare prices of specific building materials. Here’s a table that looks at the greatest price increases and decreases of construction materials in 2023.

The price comparison of building materials reveals the price of pipes and fittings had the highest increase at 22.3%, while metal doors and windows increased by 18.2% and ready-mixed concrete increased by 13.4%. On the other hand, prices of concrete reinforcing bars had the highest decrease at -22.7%, fabricated structural steel decreased by -18.2% and aggregate matter decreased by -10.3%. By considering price changes for specific material types, you can plan accordingly for your next construction project.

Industry implications

The CMPI is also helpful in assessing the state of the construction industry. Overall, in December 2023 there was a decrease in all work by 2%, but a slight increase by 0.4% in new housing. The construction statistics also reveal a significant decline of -32.5% in brick deliveries and -41.6% in block deliveries. This suggests issues in the supply chain which could lead to broader implications for the housing market, as slower deliveries means it is taking longer to build new homes. You can read more about these materials in our block vs brick guide.

If you consider this alongside the current shortages in available housing, it may lead to an increased cost of building materials. This creates a difficult loop, because if construction costs are higher for new homes, there will be more demand for existing houses, which can lead to higher prices across the housing market.

In-depth analysis of factors influencing CMPI

The Construction Material Price Index encompasses many factors, both on a local and global level, and we look at the key influencers below.

Identify key influencers

Supply chain disruptors - disruptions in the supply chains can be caused by logistics, strikes, natural disasters, global pandemics or geopolitical conflicts. If there is difficulty in providing or receiving supply, this can increase the cost of building materials.
Global demand - if there is more demand for building projects, it can influence the Construction Price Index with increased prices worldwide.
Energy prices - in order to produce most construction materials, energy input is needed. If energy prices are higher, this can also increase the cost of building materials.
Labour costs - certain labour regulations, such as minimum wage policies, can have an effect on the production, distribution and therefore price of construction materials.
Technological advances - with technological innovations of cost-effective and efficient material production, there can also be a positive impact on the Construction Material Price Index.
Environmental regulations - if there are new standards for environmental regulations, it could increase the costs of producing certain materials and therefore the overall cost of construction projects.
Economic policies - economic policies, including government spending on infrastructure, can influence construction activity levels, demand for materials, and therefore the Construction Price Index.
Currency exchange rates - construction materials are often traded on global markets, which is why changes in currency values can have a direct impact on the cost of importing and exporting construction materials.

Market forces and external factors

As discussed, market forces and supply chain dynamics can affect the CMPI. This is directly linked with the global economy - booms have higher prices, recessions have lower prices. Building regulations are another critical external factor, since it sets the standard for construction quality and considers environmental impact. Stricter building regulations may require better-quality or specific types of materials, which can be more expensive.

Future projections and strategies

At this point in time, the construction industry is transforming with several factors at play. We offer insights into future trends below.

Predictive analysis

Short-term: as 2024 begins, we may continue to see volatile construction statistics due to the current global situation. With changes in demand, disruptions in supply chains, high energy costs and geopolitical tensions, prices may remain unstable for the time-being.

Medium-term: depending on the global situation, we can expect to see prices stabilising eventually. As new technologies and processes are adopted, along with environmentally-friendly practices, efficiency is expected to improve which could help reduce costs of building materials.

Long-term: with the implementation of green-building practices, we expect to see more use of sustainable materials. Besides reducing the environmental impact of the construction industry, there may also be cost-savings with more efficient and durable materials.

Strategic planning recommendations

For businesses within the construction industry, here are some options to give you some ideas on how to navigate the current uncertainty surrounding the Construction Material Price Index:

Flexible budgeting - make sure to leave some room in the budget for potential price increases, so that your business can remain resilient in unpredictable situations.
Multiple suppliers - it’s helpful to have multiple suppliers in different regions, so there is less of an impact on your business if there are disruptions in the supply chain.
Invest in technology - there are digital tools that can help with forecasting which your business can use for preemptive adjustments as well as better strategies.
Explore alternative materials - in preparation for green-building practices, it may be helpful to consider sustainable materials that are cost-effective and more efficient.
Market trends - by staying up-to-date on market trends with industry reports and predictions, your business will be better prepared in case of fluctuating construction statistics.

Stakeholders within the construction industry should consider the above measures to help manage risks with the Construction Price Index. It’s also important to prioritise research on new technologies, sustainable materials and emerging regulations to gain a competitive advantage in the evolving industry.

Disclaimer: The information contained on this page is intended as an overall introduction and is not intended as advice from a professional. Travis Perkins aims to avoid, but accepts no liability, in the case that any information stated is out of date.

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