The latest data from the national statisticians ONS on services producer prices adds more concerns over rising inflation for contractors.

The ONS’s services producer price indices provide data on price movements across a range of businesses, including plant hire, that provide services to other businesses.

The recession in construction had driven plant hire prices down hard. But now it seems they are bouncing back as is clear from the graph below.

Prices in the final quarter of 2010 were 2.2% up on the previous quarter and 1.8% up on a year earlier.

Plant hire firms have a long way to go to rebuild the prices they enjoyed before the recession, but it seems that they may be on the way to rebuilding margins and restoring some of the lost ground on prices.

And with general inflation rising how much further downward pressure plant hire firms can maintain on costs without passing them on to their customers is up for debate.

If we look through the most recent statements by the bigger listed hire firms we see a broad view that the market has stabilised and that hire rates are strengthening.

Good news perhaps for the plant firms, but something else for contractors to factor in as they price work for the future.

Topics