Construction Input Costs Rise 11.9% From September 2025 To September 2026 As Price Increases Spread From Fuel & Metals To Other Goods & Deliveries

Construction Firms Getting Hit With 'Double Whammy' of Rising Materials and Fuel Costs and Delayed Delivery Schedules for Steel Components While Soft Demand Makes it Hard for Firms to Raise Bid Prices

The producer price index for inputs to new nonresidential construction jumped 11.9% from September 2025 to September 2026, the most in four years, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said construction firms appear to be absorbing most of the cost increases amid relatively soft demand for construction projects except data centers.

"Construction firms are being hit by a double whammy of tariff- and war-induced materials cost increases as higher metals and fuel costs permeate an ever-wider range of prices," said Ken Simonson, the association's chief economist. "Making matters worse, lead times for key steel components have lengthened, making it harder for contractors to keep projects on schedule."

The largest price increases affected petroleum products. The producer price index for diesel fuel, which reflects prices at the refinery or fuel terminal level, more than doubled over the past 12 months, rising 115.2%. The index for liquid asphalt rose 17.7% year-over-year. The index for truck transportation of freight increased 19.3%, as motor carriers passed on their fuel costs.

Metals prices have also risen steeply since tariffs of up to 50% were imposed in 2025. Prices climbed year-over-year by 25.2% for aluminum mill shapes, 27.6% for steel mill products and 30.0% for copper and brass mill shapes. Products that incorporate steel have also been affected: the index for precast concrete products, which have steel embedded in their shapes, increased 10.5% from a year earlier.

Construction firms are encountering extreme difficulty with steel availability as well as pricing. Contractors report that the firms producing beams and other steel shapes needed to erect building frames say their order books are full through the spring of 2027. Some contractors have been told they will only receive a small fraction of the beams they had ordered and that alternative suppliers are refusing orders from new customers.

Association officials urged federal officials to take steps to address both rising costs and relatively soft demand. Those steps should include working to address trade disputes that are prompting many of the tariffs, the officials noted. And they urged Congress to pass a new multi-year surface transportation bill that fully funds road, bridge and transit improvements.

"Public policy uncertainty and instability impedes construction activity. Full stop. Having a new transportation bill is necessary before states plan for and launch major projects that boost demand for construction and create opportunities for economic growth," said Jeffrey D. Shoaf, chief executive officer of the Associated General Contractors of America. "Resolving trade disputes will ease the price uncertainty that slows private construction."

View producer price index data.