Inventories Depleted as Boom Follows Bust
Across the board, prices of building materials have been skyrocketing for the past few months. Distributors are reporting that increases of five to ten percent on building materials are typical for nearly every manufacturer. An increase of less than five percent is an exception while many product lines have seen a whopping 15 percent increase or even more!
However, these price increases are out of line with the inflation rate. Figure 1 shows the inflation rate was less than one percent in the United States in 2020. So, if inflation is not driving up the prices of building materials, what is causing it then?