Building merchant Travis Perkins warns inflation getting worse

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EMBARGOEDTO 0001 SATURDAY MAY 8 File photo dated 28/02/12 of a construction site. More than 1.1 million homes granted planning permission in England in the past decade are yet to be built, according to the Local Government Association (LGA). Issue date: Saturday May 8, 2021.
Price inflation is a hot topic in the booming construction sector. Photo: PA

Building merchant Travis Perkins (TPK.L) warned on Tuesday that inflationary pressures have accelerated through the first half of the year, with prices increasing by around 4% overall. 

Increases seen in the first quarter were about 2% compared with the second quarter, which saw prices rise by around 7%.

"Inflationary pressure is expected to persist in the near term with shortages on some key product lines, most notably in raw materials such as timber and plasterboard related products, which has posed a particular challenge for CCF," the company said. 

Watch: What is inflation and why is it important?

Despite this, coupled with uncertainty due to the pandemic, the FTSE 250 company said that it expects the market to remain strong for some time. 

It said: "Despite these challenges, the merchanting businesses have managed the issues well, working closely with customers and suppliers to ensure a fair outcome for all."

In its first half, like for like revenue in continuing businesses grew by 44.1% and was 14.5% ahead of 2019.

Shares were down about 2% by 10am in London following the release, having steadily climbed for the year-to-date. 

TravisPerkins stock chart. Source: Yahoo Finance
TravisPerkins stock chart. Source: Yahoo Finance

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The construction sector has been booming during the pandemic, as a hot housing market and a rush to make home improvements took hold. 

This is also the latest of a string of warnings on price inflation. On Monday, key survey of the manufacturing sector showed yesterday that the dual hit of Brexit and COVID-19 continues to impact UK manufacturing, leading to a "sharp rise" in costs. 

IHS Markit said that raw material shortages, disruption caused by COVID-19 and Brexit and capacity issues across the distribution network (including delays at ports, freight and shipping services) also contributed to delivery delays.

Watch: UK inflation jumps to 2.5%, close to a three-year high

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