Construction Materials Costs Climb In March, Driven By Near-record Jump In Diesel Fuel Price And Further Increases In Prices For Key Metals

Construction Association Officials Warn Rising Metals and Fuel Costs Could Put Additional Pressure on Project Budgets; Impact on Project Delays and Costs Depends on Extent of Damage and War's Duration

The producer price index for materials and services used in nonresidential construction recorded its largest one-month increase in four years last month, driven by a near-record jump in the price of diesel fuel and ongoing increases in metals prices, according to an analysis by the Associated General Contractors of America of government data released today. Association officials warned that fast-rising costs are pressuring contractors, making it harder for project owners to go ahead with planned construction, and jeopardizing economic growth.

"The staggering jump in fuel costs only reflects prices as of mid-March," said Ken Simonson, the association's chief economist. "Diesel fuel prices have continued to rise sharply since then, while the destruction of aluminum facilities and blockage of ship movements due to the Middle East war is driving costs still higher."

The producer price index for inputs to new nonresidential construction climbed by 1.7 percent from February to March, the most since January 2022. The index rose 4.4 percent over 12 months, a three-year high.

The index for diesel fuel soared 37.8 percent from February to March 13, the day prices are collected each month for calculating the indexes. That increase reflected the impact of the first two weeks of the Middle East war, Simonson noted. The only larger one-month rise was a 39.7 percent jump during the Gulf War in 1990.

In the month since March prices were collected the average retail price of diesel fuel has jumped another 71 cents per gallon, or 14 percent, according to AAA, the economist added. He said contractors have reported being hit with rapidly increasing fuel surcharges on the thousands of deliveries of materials and equipment to jobsites, in addition to the direct cost of fuel they buy for their trucks and construction equipment.

The indexes for three key metals used in construction continued to post outsized increases, driven by tariffs as well as the war. The index for aluminum mill shapes rose 1.2 percent for the month and 34.1 percent year-over-year. The index for copper and brass mill shapes rose 0.5 percent in one month and 21.3 percent over 12 months. The index for steel mill products rose 2.1 percent from February and 15.4 percent from March 2025.

Association officials noted that rising costs for metals and fuel highlight how sensitive construction supply chains remain to global disruptions and trade policy. They urged federal officials to pursue policies that reduce volatility in materials markets and provide greater certainty about the future cost of key construction inputs.

"Because contractors can seldom pass along cost increases after committing to a project, these extreme, sudden jumps are causing major hardship," said Jeffrey D. Shoaf, the chief executive officer of the Associated General Contractors of America. "In addition, uncertainty over future costs and demand for structures may cause owners to delay or cancel previously planned projects, adding to contractors' woes and slowing economic growth."

View producer price index data.