BMF forecast highlights price inflation over volume growth

The latest Forecast Report from the Builders Merchants Federation (BMF) highlights growing uncertainty in the supply chain, stemming from rising energy prices, which has further increased since the outbreak of war in Ukraine.

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

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.

Commenting on the forecast, Sarup Ubhi, BMF Industry Analyst/Economist said: 

“It was initially anticipated that material price inflation would ease throughout 2022, 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. The increase in the price of raw materials in March 2022 was the highest in six months, which could further constrain the availability of certain products.

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

The Builders Merchants Industry Spring Forecast Report 2022 is supplied free to BMF members and priced at £250 for non-members.  Contact Sarup Ubhi, BMF Industry Analyst/Economist at [email protected] to request a copy of the latest report or if you have any questions.

SOURCE: BMF

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