A survey by the Construction Products Association has revealed how hard manufacturers have been hit by cost increases with the situation set to get even worse throughout 2011.

Manufacturers will have to pass significant price rises on to contractors as their margins are eroded.

Waterproofing specialist Icopal started the expected round of price hikes yesterday with a 10% increase.

Noble Francis, Economics Director at the Construction Products Association said: “More than three quarters of manufacturers reported that costs rose significantly over the last 12 months, with the last three months seeing a particularly sharp increase.

“Cost rises were mainly due to fuel, but increases in the prices of copper, steel and plastics also contributed to the rise.

“Looking ahead, the vast majority of manufacturers also anticipate that costs will continue to rise significantly over the next year, which will reduce margins further and push up costs of construction.”

Key points from the survey include:

• 77% of manufacturers reported that input costs rose significantly during the last 12 months
• 59% of manufacturers stated that input costs rose significantly during the last three months
• 97% of manufacturers reported that fuel costs rose significantly over the last 12 months
• 65% of manufacturers anticipate further significant rises in the price of fuel during the next 12 months
• 75% of manufacturers stated that gas prices had risen significantly during the last 12 months
• 43% of manufacturers anticipate that gas prices would increase significantly during the next 12 months