The construction industry faces a ‘second wave’ of inflation, as skyrocketing energy prices drive wages up, as well as other costs, the boss of one of the largest building-materials’ companies has warned.
Chief Executive of CRH, Albert Manifold, said he has been seeing “second wave of cost increases” after Russia’s invasion of Ukraine in February initially pushed gas prices up.
Manifold, who was quoted in the Financial Times, added that the group was struck with a 50% rise in energy costs in the first half of this year. The energy hike impacting the entire country has also pushed wages up in certain industries, as well as the cost of logistics “since June or July”.
He is quoted as saying: “The energy cost came through almost immediately after Russia invaded Ukraine. That put pressure on the cost of living and that is what is now driving wage inflation. As people absorb energy [cost] increases, they are ramping up the costs for logistics [and] central bankers and politicians have to deal with that challenge.”
The warning of a second wave of inflation came as figures published by the Office for National Statistics (ONS) revealed that monthly construction output fell by 1.4% in June, following seven consecutive months of growth.
The decline in June was largely down to a drop in new work and repair and maintenance. This was the first time since October last year (when output fell by 0.9%) that the figure had shrunk significantly after consecutive months of growth.
The data has prompted worry among consultants that wider economic turbulence has already started to negatively impact the pipeline of construction work for firms.
Weekly wage rises have already been picked up by official statistics, with ONS data showing that pay packets in the construction sector rose 6.3% over the past three months with average wages topping £700 per week. Despite this, pay actually fell in real terms, as inflation reached 9.4% in Jule, which was its highest rate in four decades.
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