The increase in sales values of building materials during the first half of the year has been driven by price inflation rather than volume growth.
The BMF’s Builder Merchants Building Index latest report on sales of building materials in the UK, once again underscores the impact of price inflation on the sector.
Overall sales revenue in Quarter 2 2022 was the highest since the BMBI started in 2015 but, just as in the first quarter of the year, this was largely driven by price inflation rather than volume growth.
Q2 2022 vs Q2 2021
A detailed comparison of Q2 2022 with Q2 2021, shows total builders merchant sales increased by +4.0%, with one less trading day this year. Volume sales were -11.3% lower, while prices increased by +17.3%.
In terms of Q2 sales values, Heavy Building Materials – the largest category – recorded a +9.2% increase in 2022 vs 2021, while both Timber & Joinery (-3.0%) and Landscaping (-6.3%) decreased. Kitchens & Bathrooms was the highest performing category, increasing by +18.5% in value.
Only three categories saw volume increases from Q2 2021 to Q2 2022. Services was up by +37.2%, while Renewables & Water Management and Kitchens & Bathrooms were up by +10.6% and +3.3% respectively.
Half year comparisons
Looking at the first half of 2022 reveals a similar story, with a value growth figure of +10.1% compared against the same period in 2021. Drilling down, the market has seen first half price growth of +16.6%, versus a volume decline of -5.6%.
Behind this, however, is a very telling picture of where the market is heading. Q1 2022 pricing was heavily influenced by a Timber & Joinery year-on-year price increase of +36.9%, which dropped to +30.5% in Q2. Heavy Building Materials has now become the category under pressure, with annual price growth up from +11.8% in Q1 2022, to +18.3% in Q2.
John Newcomb, CEO of the Builders Merchants Federation said: “The negative effect of rampant inflation is starting to show with escalating input costs across fuel, energy, raw materials and wages impacting production costs and adding to existing material supply issues. It is plain to see that the increase in sales values of building materials during the first half of the year has been driven by price inflation rather than volume growth. Regrettably, this pattern seems set to continue into 2023.”
Emile van der Ryst, Senior Client Insight Manager – Trade at GfK added: “The second quarter of this year has amplified some of the global difficulties, with the continued Russian invasion and spiraling cost of living issues at the forefront. Unfortunately, no immediate end is in sight. With UK inflation approaching double digits, the counterbalance between inflation and interest rates is increasingly difficult to control and will be the ultimate test for the next year or so.”