Building Materials Prices Will Stop Rising?

Building Materials Prices Will Stop Rising?


Contrary to predictions, the Russian market continues to see spikes in prices of building materials, in the first place lumber, PVC products, bricks and concrete.

The building materials price growth is still exceeding the overall inflation rate by several times. The June inflation amounted to 0.69% compared to May 2021. Moreover, it has already reached 6.5% year-on-year.

Taking into account this situation, the Federal Antimonopoly Service (FAS) initiated inspections of large producers of these products and construction organizations warning that it would take measures against violations of the antimonopoly legislation.

The Federal State Statistics Service (Rosstat) reported that prices of building materials increased by 23.9% in June year-on-year. As for price hikes since the beginning of the year, prices of edged boards jumped 15.7%, metal tiles 12.3%, Euro fibre cement sheets 6.8%, roofing felt 5.7%, chipboards and oriented chipboards 19.2%, red brick 4.6% and window glass 3.7%. In June, prices of building materials surged 6.75% on average (versus 4.99 percent in May) while the increase since the beginning of this year amounted to 19.63%.

Unsurprisingly, price gouging in the first half of 2021 prompted the FAS to check major construction companies and producers of basic building materials for possible collusion.

The antimonopoly service also said that its regional branches would conduct regular monitoring in order to control the prices of basic building materials.

Deputy Prime Minister Marat Khusnullin who reported to President Vladimir Putin on the implementation of the Eastern Polygon railway project had to inform him about the significant increase in the cost of construction materials. According to Khusnullin, although the project was making good progress, it ran into difficulties with the rising cost of building materials being a key problem.

“I have instructed Glavgosexpertiza to strictly control the cost of construction materials,” said Khusnullin. “We have recalculated the cost of all extra procurements, which amounted to about 40 billion rubles ($539.6 mln) for the next three years.”

However, the situation with the prices of construction materials is likely to change for the better. According to the Ministry of Industry and Trade, the prices of building materials in the domestic market are expected to be more balanced due to price reduction in international markets. The ministry’s report said that in June, the growth of prices of certain building materials in the timber industry was “considerably higher than the average.” As prices in foreign markets, primarily in the U.S. and China, began to decline gradually, this led to adjustments concerning Russian export contracts.

“We expect that in the future, this circumstance will lead to more balanced prices on the domestic market as well,” the press service of the Ministry of Industry and Trade said.

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