Raw material prices look set to remain high

Apr 28, 2021
Stephen is one of the firm’s tax partners. He specialises in income tax, capital gains tax, corporation tax, inheritance tax, and stamp duty land tax. He also specialises in advising property and construction businesses.
Raw materials

A survey conducted by the Construction Products Association (CPA) has found that price inflation for raw materials will continue to rise for the remainder of 2021.

The survey found that housing is leading the economic recovery for the construction sector. But there is expected to be a shortage of materials for the next 12 months. This lack of materials and the increasing demand for them are pushing prices up. The survey also found that the supply of raw materials and components was also a primary concern for manufacturers, with materials such as steel, timber, and chemicals referenced. 90% of heavy side manufacturers stated an increase in cost for raw materials in the first quarter of 2021. Furthermore, 41% of heavy side manufacturers have reported an increase in sales in quarter one.

Heavy side materials are most commonly used in structural materials. Therefore, there are more likely to be used in the early process of construction, for example, steel and cement. The increase in sales is very encouraging. But the continuing price increase suggests that there is a shortage of these materials and the supply chain could be at risk of being held up by a bottleneck which could slow down the economic recovery. However, the trade body has discovered that the extension of the job support scheme and Stamp Duty holiday, as well as the introduction of the new 5% deposit scheme, is anticipated to continue to drive the recovery of the property and construction sector.


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Stephen Charles

Tax Partner, Sheffield