Building Materials Inflation Outpaces CPI

Building material prices increased in the most recent quarter after a period of levelling off since fall 2021 as supply chain disruptions are easing and shipping costs are beginning to recede, says Aon. Its ‘Inflationary Trends Canada’ report shows building materials inflation has outpaced the CPI (consumer price index). Construction labour, however, has so far lagged broader wage growth than CPI, but there are signals the construction labour market is tightening further. Inflation is expected to moderate over the next one to two years to levels that are higher than pre-COVID years, but less than what was seen in 2021. However, the Bank of Canada expects high inflation to remain throughout 2022, but to ease to be around 2.5 per cent in the second half of 2023 and return to two per cent target in 2024. Meanwhile, a Reuters survey of economists indicates an inflation rate peaking at or above six per cent for the next few months, with their 2022 year-end forecasts ranging from 3.3 per cent to 5.8 per cent.