Increasing Cost of Latex Paint

Business Week Magazine reported this week that the “The seasonally adjusted PPI (Producer Price Index) for finished goods jumped a sharp 1% in January, after dropping in December by a revised 0.3%. The core PPI, minus volatile food and energy, rose 0.4%—considerably less, but still a worrisome number, twice what analysts had predicted. Perhaps most alarming, for the 12 months ended in January the PPI is up 7.4% on an unadjusted basis, the highest since October, 1981.”

Data such as this confirms the worry related to the acceleration of inflation seen in the CPI and PPI, and spotlights the Federal Governments dilemma in fighting recession while dealing with the upward creep in inflation within the US economy.

These inflationary trends can be seen in certain segments of the construction materials industry. For example, the cost of paint rose less in January 2009 than in previous months; however, paint is still significantly more costly (16%) today than it was three years ago.

PAINTS PRICING TRENDS:

12-08 to 01-09 .1%
11-08 to 12-08 5.3%
09-08 to 12-08 4.9%
12-07 to 12-08 16.7%
12-05 to 12-08 16.3%

The cost of interior latex semi-gloss paint rose steadily over the year in 2008, due to increased costs of raw materials and the reformulations required to meet new regulations for volatile organic compounds. Paint suppliers indicate that prices should be stable in 2009.

• Information provided by RS Means, Design & Cost, February 24, 2009.
• http://www.businessweek.com/executivesummary/archives/2008/02/prices_up_confi.html