U.S. Construction input prices continued to fall in December primarily due to plunging oil prices.

Construction input prices decreased 0.6% in December compared to the previous month. It follows November’s 0.3% dip and a 1.2% decrease in October, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released Jan. 12.

“Construction input prices fell sharply in December,” said ABC Chief Economist Anirban Basu in a news release. “While plunging oil prices are the primary factor behind the sharp decline, most input prices were tame in 2023’s final month. That serves as a fitting end to a year during which aggregate input prices increased just 1.2% and many individual commodity prices actually fell.”

Nonresidential construction input prices decreased 0.4% for the month. Overall construction input prices are 1.2% higher than a year earlier, while nonresidential construction input prices are 1.6% higher.

Prices decreased in two of the three energy subcategories last month:

• Crude petroleum input prices were down 13.2%
• Unprocessed energy materials were down 9.1%
• Natural gas prices rose 1.5%

“Despite continued materials price moderation and other positive developments regarding inflation, the outlook is not without risks,” said Basu. “Piracy in the Red Sea and the resulting diversion of ships from the Suez Canal around the Cape of Good Hope has caused global freight rates to nearly double in the first two weeks of 2024, according to the Freightos Baltic Index. All else equal, rising shipping costs will put upward pressure on certain inputs.”