Construction materials price inflation continues to increase faster than overall inflation although inflation weakened in both indexes in February. The economy-wide Producer Price Index fell 0.6 percent, almost entirely due to a drop in oil prices. The materials price index rose 0.1.

A 10 percent drop in diesel prices and an 8 percent fall in non-ferrous metal prices, the only significant price declines in February, almost completely offset sharp rises in asphalt, lumber, and plywood prices and smaller increases in most metal and concrete product prices. The drop in diesel prices will be reversed in March since diesel prices have already increased $0.18/gal. between the February and March price survey weeks.

The materials price index has increased 1.5 percent in the last three months. This is about a 6 percent annual pace which is the expected trend well into 2011. Operating your trucks and landscape equipment may be cheaper, but costs for landscape installations will go up. The extra cost can be applied to the consumers.

The significant prices increases in February were 10.2 percent for asphalt, 7.5 percent for softwood lumber, 5.6 percent for plastic resin and 5.1 percent for softwood plywood. More asphalt price increases have been announced since the February price survey week. Lumber prices have been steady since early February.

The current price level is consistent with balanced market demand and supply. Prices are likely to cycle about the current level this year with no sustained move in either direction. Similarly, the February rise in plastic resin prices is a periodic adjustment to higher oil prices and does not signal continuing price rises in the coming months. ?EUR??,,????'?????<