Inflation trends continue to drive growth in the South West building materials’ sector

South West is among the top performing regions for growth in the building materials supply chain for the third quarter of 2022.

However, the Builders Merchant Building Index (BMBI) for Q3 2022, from national trade body the Builders Merchants Federation (BMF), found growth continues to be driven by rising prices rather than an increase in sales.

 

In the South West, the value of sales increased by 11.9% in the third quarter compared to the same period in 2021.

 

Overall, sales from January to September 2022 in the South West were 4.9% higher than the first three quarters of 2021.

 

David Young is the BMF’s South West Regional Chair. He said: “The south west has seen decent levels of growth with trade customers offset by negative growth with retail customers.

 

“Price inflation continues and with the war continuing in Ukraine utility prices are set to remain high into 2023.

 

“The good news is that inflation is slowing and forecasts suggest single digit increases next year.

 

“I remain optimistic that the south west will continue to outperform the rest of the country and currently there are no signs of things slowing down.”

 

The BMBI reveals that, across the UK, the total value of sales for July to September 2022 were 4.3% higher than the same period last year – but while prices increased by 14.6% the volume of sales dropped by 9%.

 

Figures for the year-to-date show that sales from January to September 2022 were up 8.1% compared to the same period last year.

 

John Newcomb, CEO of the BMF, said: “We have seen a pattern emerge across the South West and the UK throughout the year where sales value increases have been largely driven by price inflation rather than volume growth.

 

“Following the Autumn Statement commercial and retail customers alike will increasingly feel the combined squeeze of rising prices, interest rates and taxes.

 

“This will undoubtedly feed into the next 12 months as the Chancellor’s measures to counteract recession further reduce consumer spending power.”

 

The BMBI includes a breakdown of sales figures by region and is seen as a gold standard measure of sales activity in the building materials sector – an industry considered a key bellwether of the national economy and the ‘mood of the nation’ in terms of home repair, maintenance and improvement.

 

Using GfK’s point of sale tracking data, the BMF’s BMBI is drawn from over 80 per cent of builders’ merchants sales throughout the country, making it the most reliable source of data for the sector.

 

Emile van der Ryst, Senior Client Insight Manager – Trade at GfK added: “This consistent theme of price increases and volume declines mirrors much of what is seen across the UK economy and like other sectors there’s probably an expectation that volumes will continue decreasing.

 

“In September, GfK’s Consumer Confidence set a record low since tracking started in 1974, a clear reflection of the difficulties currently experienced.”

 

Figures from the BMF’s BMBI are used in the Department of Business, Energy and Industrial Strategy’s Monthly Construction Update.

 

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