The latest Forecast Report from the Builders Merchants Federation (BMF) highlights growing uncertainty in the supply chain, stemming from rising energy prices, which has further increased since the outbreak of war in Ukraine.

The Report forecasts annual builders’ merchants sales growth of 6.1% in 2022, but cautions that the majority of this year’s growth will be due to price inflation rather than increased volumes.

The BMF forecast combines a comprehensive analysis of merchant market performance from July 2014 to December 2021, taken from the Builders Merchants Building Index (BMBI), coupled with analysis of key factors affecting builders’ merchants’ sales to project future sales in 2022.

Commenting on the forecast, Sarup Ubhi, BMF Industry Analyst/Economist said: “It was initially anticipated that material price inflation would ease throughout 2022, the past 12 months having been dominated by material availability and increasing inflationary pressures. However, an extended conflict in Ukraine increases the potential for inflationary pressures to persist throughout 2022.

“The main effect of the conflict on building material supply is increasing energy and raw material costs. The cost of steel, cement, glass, and other energy intensive products are all expected to increase again due to the energy crisis.  Raw material prices are also rising. The increase in the price of raw materials in March 2022 was the highest in six months, which could further constrain the availability of certain products.

“It is unlikely that manufacturers will be able to fully absorb these price increases. Therefore, cost increases are expected to be implemented at every level of the supply chain.”

Matthew Phillips, Managing Director of Mark Vitow Ltd commented: “Yes, there are huge challenges ahead. Inflation for one – and it’s not as easy to reduce the size of building products as it is a Dairy Milk bar as Cadburys have just done (by 10%). And then there are the supply chain issues, shipping costs, inflation, stagflation, yet further effects of COVID-19, the invasion of Ukraine – on this point I must say that the BMF Ukraine Appeal of which Mark Vitow is a supporter is simply phenomenal – and likely more to be thrown into the mix too; if the last two years have taught us anything it must be to prepare for the unexpected. But we are forecasting significant growth for ourselves this year and following on from significant recent investments, such as that in our new ERP software and B2C customer portal in 2021, we are investing heavily again in 2022, mainly in recruiting additional people from the wealth of talent in our industry.

“We remain confident that 2022 will be the best ever in real terms over Mark Vitow’s history and that there exists similar opportunity across the sector. There will certainly be losers but amongst those making the correct strategic decisions there will be some big winners too.”

The Builders Merchants Industry Spring Forecast Report 2022 is supplied free to BMF members and priced at £250 for non-members.  Contact Sarup Ubhi, BMF Industry Analyst/Economist at sarup.ubhi@bmf.org.uk to request a copy of the latest report or if you have any questions.