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Fri May 27 2022

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Merchants see sales volumes flattening out

10 May Sales forecasts from the Builders Merchants Federation (BMF) reflect growing uncertainty in the supply chain, stemming from rising energy prices, exacerbated by the Russian invasion of Ukraine.

The latest BMF Forecast Report predicts that sales volumes will level out and revenue growth will largely be due to inflation raising the prices of the goods sold.

The Report forecasts annual builders’ merchants revenue growth of 6.1% in 2022, with most of this attributable price inflation rather than increased volumes.

 The BMF forecast combines an analysis of merchant market performance from July 2014 to December 2021, taken from the Builders Merchants Building Index (BMBI), coupled with analysis of factors affecting sales to project future sales in 2022.

BMF economist Sarup Ubhi said: “It was initially anticipated that material price inflation would ease throughout 2022, the past 12 months having been dominated by material availability and increasing inflationary pressures. However, an extended conflict in Ukraine increases the potential for inflationary pressures to persist throughout 2022.

“The main effect of the conflict on building material supply is increasing energy and raw material costs. The cost of steel, cement, glass, and other energy intensive products are all expected to increase again due to the energy crisis.  Raw material prices are also rising. The increase in the price of raw materials in March 2022 was the highest in six months, which could further constrain the availability of certain products.

“It is unlikely that manufacturers will be able to fully absorb these price increases. Therefore, cost increases are expected to be implemented at every level of the supply chain.”

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