After a brief respite in the October-December 2022 quarter, highway construction costs rose 2.7 percent in the January-March 2023 quarter, an annualized increase of 10.8 percent per year, according to the National Highway Construction Cost Index kept by the Federal Highway Administration.

Overall, construction costs are up 53.7 percent since December 2020:

According to the three-page narrative document released by FHWA, 35 percent of the increase was due to the cost of concrete, 30 percent due to increases in grading and excavation costs, and just 12 percent due to increased cost of asphalt. The narrative notes that “the ‘Asphalt’ component of the NHCCI contributed to an increase while the PPI [Producer Price Index] for Asphalt showed a stark decline, suggesting factors involved in asphalt construction, such as labor, transportation, or price markup, may be driving that portion of the cost increase as opposed to the cost of the material itself.”

In what may be a sign of labor market stabilization, the cost of traffic control actually declined, quarter over quarter.

The narrative also expresses hope that the NHCCI, which has roughly tracked producer price indices for the last few years, could slow down in the next two quarters, as the PPI have done. This FHWA chart compares the NHCCI, the PPI for all commodities, the full Consumer Price Index, and the Employment Cost Index for Construction:

In terms of new contracts signed by FHWA, excluding emergency relief, $132.6 billion has been recorded in fiscal 2021, 2022, and the first half of fiscal 2023. But using NHCCI to convert to costs the way they were as of October-December 2020 (the first quarter of federal fiscal year 2021), that’s only $104.6 billion in “real” obligations, meaning that the amount of highway buying power lost to cost inflation since December 2020 is now $28 billion and counting. (Check our math below.)