The monthly analysis of builders’ merchant sales is becoming a familiar pattern – less product out of the door but more cash through the tills because of prices going up even faster than sales are slowing.
Analysis of June sales for the Builders Merchant Building Index (BMBI) shows that prices in the second quarter of 2022 were, on average, 17.3% higher than in Q2 2021.
Q2 2022 sales were 4.0% higher than Q2 2021 by value, with one less trading day this year. Ten of the 12 categories sold more including Kitchens & Bathrooms (+18.5%), Heavy Building Materials (+9.2%), Decorating (+7.0%), Tools (+2.9%) and Ironmongery (+1.3%). Only Timber & Joinery Products (-3.0%) and Landscaping (-6.3%) sold less than in 2021.
Comparing Q2 2022 with Q2 2019, a more normal pre-Covid trading year, sales volumes were 2.7% down but because prices are now 28.7% higher than two years ago, the value of sales was up 25.2% on Q2 2019.
For the first six months of 2022, volumes were down 5.6% but takings were up 16.6% compared to 2021.
John Newcomb, chief executive 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 at GfK, which collates the point-of-sale data from builders merchants, added: “The second quarter of this year has amplified some of the global difficulties, with the continued Russian invasion and spiralling 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.”
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