Good morning. The August producer price numbers landed last week, and they say something every owner already feels in the P&L but can rarely put a number on: what you buy is inflating faster than what you can charge. Here's the gap, and where it's widest.
Top story — Inputs up 8.9%, bid prices up 5.3%
Producer prices for inputs to construction industries rose 8.9% over the twelve months to August 2026, and 1.2% in August alone (Associated Builders and Contractors' analysis of BLS Producer Price Index data, 10 Sep 2026). The Associated General Contractors put the same figure on inputs to new nonresidential construction: up 8.9% from August 2025 to August 2026 (AGC, 10 Sep 2026).
Now the other side of the ledger. The PPI also tracks what contractors charge — bid prices for finished buildings. The index for new nonresidential building construction rose 5.3% over the same twelve months, and was essentially flat month over month (BLS PPI commodity data, August 2026, preliminary). Office bids are up 6.0%, industrial 5.8%, schools 5.2%, health care 5.1%, warehouses 4.3%.
That is roughly a 3.6-percentage-point gap between input inflation and bid inflation, and it is not a rounding error — it is the margin on every job priced off last year's cost assumptions. Nationally, final demand PPI rose 0.4% in August and 5.4% over the year (BLS, USDL 26-1495).
Quick hits
Diesel did the damage. Diesel fuel prices jumped 24.1% in August — more than a third of the entire increase in final demand goods, and nearly two-thirds of the rise in processed goods (BLS). Truck transportation of freight rose 2.0% in the month. If you run vehicles, August was not an average month, and your delivered materials carried it too.
Metals are the structural problem, and electrical is the worst of it. Over the twelve months to August: steel mill products +23.4%, copper and brass mill shapes +20.9%, nonferrous wire and cable +19.6%, aluminum mill shapes +27.3% (though aluminum fell 4.4% in the month). On the gear side, switchgear, switchboard and industrial control equipment is up 12.3% year over year and rose 2.4% in August alone; electrical machinery and equipment is up 13.5% (BLS PPI commodity data, preliminary). Anyone quoting panel or service work off a spring price sheet is quoting at a loss.
Where it isn't happening. Not everything is on fire. Lumber fell 1.5% in August. Plastic construction products — the PVC pipe category — were roughly flat on the month and up 4.8% on the year. Plumbing fixtures and fittings were unchanged in August, +5.1% year over year. Air conditioning and refrigeration equipment is up 4.1% over the year, well below the metals it's built from (BLS PPI commodity data, preliminary). The squeeze is concentrated in wire, gear and structural metal, not across the board.
The Tip — Put a clock on your quote
An 8.9% input run-rate is about 0.74% a month. On a $40,000 material package, a quote that sits open for six weeks quietly costs you about $450 before anyone picks up a tool — and more than that if the package is heavy on wire or switchgear. Two fixes, both free and both today: date-stamp every quote with an explicit validity window (14 days on metals-heavy work, 30 on everything else), and add a materials escalation clause to contracts running longer than a quarter, tied to a published index rather than to your own invoices — it is far easier to defend a number a customer can look up. Then reprice your standard assemblies off current index levels, not off what the last job cost you.
Tool watch — [Not sponsored]
BLS publishes every one of these series free and updates them monthly at data.bls.gov. You can pull the exact index for the material you actually buy — copper wire, structural steel, asphalt roofing — and watch it move rather than arguing with your supplier about whether the increase is real. It is the cheapest pricing intelligence available to a contractor, and almost nobody in the trades uses it.
That's the callout. See you next time.
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