The Bureau of Labor Statistics (BLS) Producer Price Indexes (PPIs) for March report souring prices. The PPI for inputs to construction industries increased 2.1%, driven by a 24% increase in diesel fuel costs and a 5.5% jump in prices for steel mill products. “Red-hot steel prices, combined with record diesel fuel costs, are making construction unaffordable,” says Ken Simonson, chief economist for The Associated General Contractors of America (AGC), Arlington, Va. “Unfortunately, there is worse to come.”

The PPI for construction inputs has gone up 6.5% in the last year and 34% since steel prices first rose in December 2003. Currently, diesel prices are more than 60 cents a gallon more than the $3.44 average price for gasoline. “This puts a triple burden on contractors, who use diesel to power offroad equipment and construction trucks and also pay a fuel surcharge on the thousands of deliveries and backhauls at a large job site,” Simonson says.