UK construction cost inflation in 2026: what design-build firms need to know

The latest ONS data, the labour / materials divergence, and what it means for your pricing.

Trails Research·Updated 2026-04-18·5 min read
Construction output price index · Base 2015 = 100
Year on year vs same quarter 2025
Five-year changesince 2021

Source: ONS Construction Output Price Indices, latest release. Last data refresh: .

UK construction output prices stand at as of , year on year, and higher than 2021. The headline figure looks benign but it masks a sharp divergence between labour and materials costs that matters for anyone pricing residential work right now.

Labour vs materials: the divergence

Since 2022, labour and materials costs have moved very differently. Materials spiked during the 2021 to 2022 supply crisis and have broadly stabilised. Labour has kept rising, driven by persistent trade shortages and wage inflation, and shows little sign of levelling off.

The gap matters practically. If you're pricing a nine-month project and labour is roughly 50% of your cost base, the rate at which wages are rising flows directly into the risk you carry on a fixed-price contract. Materials at flat-to-modest inflation hardly move the number.

Regional picture

Regional cost factors have stayed broadly stable. What's changed is the overall price level, not the shape of regional variation. London remains the most expensive place to build, by a meaningful margin.

What this means for your pricing

Three practical implications if you run quotes for residential work:

  • Quote life is shorter than it used to be. With labour still rising at 0.0% annually, a quote left sitting for six months understates your cost base by roughly half that. Build this into your quote validity windows.
  • Fixed-price contracts carry real labour-side risk. For projects running longer than six months, the labour drift is material. Either price the risk in or use a fluctuation mechanism.
  • Procurement timing matters less than it did. In the 2021 to 2022 crisis, locking in materials early could save 15%. With materials stable, bulk pre-purchase earns much less, so there's less case for carrying the storage cost.

How this figure is produced

The numbers on this page are pulled from the ONS Construction Output Price Indices release and MHCLG's Monthly Statistics of Building Materials and Components, both published under the Open Government Licence. Trails refreshes the data automatically each quarter. You can explore the underlying series yourself in the Cost Tracker.

One caveat worth being explicit about: the ONS output price index is a blended measure across building types. Residential extensions in particular may move slightly differently to the blended figure. Use this as a directional benchmark, not a line-item certainty.

Frequently asked questions

What is the current UK construction cost inflation rate?
The figures on this page refresh on each ONS release. At publication, UK construction output prices are running in the low single digits year on year, with the gap between labour and materials the defining feature rather than the headline number. For the exact current value see the hero stat block above, pulled live from the ONS Construction Output Price Indices release. The headline masks meaningful divergence: labour is running several points above materials, so a blended figure understates risk on labour-heavy residential work.
Why is UK construction labour inflation higher than materials inflation?
Three structural reasons. First, post-Brexit labour supply contracted roughly 8% for EU-born construction workers according to ONS Labour Force Survey data, and domestic replacement has been slow. Second, the Apprenticeship Levy and CITB levy raise the effective cost of employing trades. Third, employer National Insurance changes from April 2025 added further cost. Materials, by contrast, peaked during the 2021 to 2022 supply crisis and have broadly stabilised as global shipping and steel prices normalised. See the companion piece on the labour versus materials divergence for the historical chart.
How often does the ONS Construction Output Price Index update?
Quarterly. The ONS releases the Construction Output Price Indices typically in the second month after the end of each quarter, so Q1 data appears in May, Q2 in August, and so on. MHCLG's Monthly Statistics of Building Materials and Components release monthly on a three to four week lag. Trails refreshes the figures on this page automatically on each release, so the page you are reading reflects the latest published data. The release schedule is published on the ONS website under Release calendar.
Is the ONS construction output price index the same as the BCIS tender price index?
No. The ONS Construction Output Price Index (COPI) measures the prices contractors charge clients for work done, blended across building types. BCIS publishes a separate Tender Price Index based on accepted tender prices on a sample of real projects, which captures market sentiment and margin more than pure cost. BCIS is paywalled; ONS COPI is free. For most cost planning purposes COPI is adequate. For bid-level benchmarking BCIS TPI is more sensitive but harder to justify the spend at small-practice scale.
Does ONS COPI cover residential extensions specifically?
Not directly. ONS publishes separate indices for new housing, repair and maintenance, and various non-residential categories, but not an extension-specific series. Residential extensions sit closest to the Repair and Maintenance Private Housing series, though most QSs blend the New Housing and R&M series to get a reasonable proxy. Extensions carry a higher finishes content than new build, so labour-sensitive periods tend to pull extensions above the blended rate. Treat the headline COPI figure as directional, not line-item certainty.

About this data

This article uses live data from Trails Cost Tracker, aggregating ONS Construction Output Price Indices, MHCLG Monthly Building Materials Statistics. Data is auto-refreshed each quarter.

→ See the full Trails Cost Tracker→ Methodology and sources

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