Contractors are watching UK inflation with trepidation as last month it soared to its highest level since April 2010.
The Civil Engineering Contractors Association has warned that rising inflation, particularly affecting fuel prices, will hinder contractors in 2011.
Official figures revealed that yearly CPI inflation had reached 3.7 per cent in December, up from 3.3 per cent in November, and way above the Bank of England’s official target of 2 per cent.
Ceca said that contractors were particularly concerned that these increases come from price rises in fuels and lubricants, which rose in December by 2.8 per cent, the largest rise for a November to December period since 1996.
Petrol and diesel prices also saw a steep increase, reflecting a sharp rise in the price of oil between November and December 2010. The price of petrol, as recorded by the CPI, stood at £1.22 in December 2010, a record high.
Ceca national director Rosemary Beales said: “Today’s inflation figures will be very concerning to contractors, who are still struggling with rising costs and shortages of workload as the industry slowly comes out of recession. With fuel now hitting record highs, contractors will see their businesses suffer further increased costs at the beginning of 2011.
“Cost inflation is not an issue that is going to go away in 2011. It is therefore vital that the whole industry works together to manage its impact. Failure to do so will threaten both businesses and projects nationwide.”