Repair supply chain costs in 2026: the pressures shaping claims spend

By Ian Davies - 17th September 2026

The costs behind property repair and reinstatement are being shaped by several pressures at once. For claims teams managing indemnity spend and reserves, it helps to understand which of these are structural, which are driven by energy and global events, and where material prices are behaving differently from the headline picture. This update summarises the main factors and the steps we are taking across our supply chain in response.

1. Labour remains the most significant structural pressure

Labour is arguably the biggest structural pressure facing UK construction, and one of the most important issues for the sector. Even when material prices stabilise, wage and subcontractor inflation can continue to push project costs upwards.

Respondents to the Bank of England’s Decision Maker Panel expect wage growth of 3.4% over the year ahead, a figure referenced in the September 2026 Monetary Policy Committee minutes.

2. Energy is becoming particularly important again

Energy is a major current issue because it affects construction costs in two ways. Directly, it drives the cost of diesel for plant and vehicles, electricity on site, heating and temporary accommodation, and the manufacture of construction products. Indirectly, it feeds into the price of energy-intensive materials including steel, cement, bricks, glass, ceramics, insulation, asphalt and plastics.

3. Geopolitical instability and supply chain disruption

Geopolitical events are probably the biggest source of uncertainty for the sector, rather than necessarily the biggest individual cost. Construction remains exposed to oil and gas prices, shipping costs, global steel and aluminium markets, imported electrical equipment, plant and machinery, timber, insulation, mechanical equipment, and transformers and other specialist equipment.

In its Global Office Fit-Out Costs Guide 2026, JLL identifies the conflict involving Iran and the associated disruption to energy markets as having potential consequences for the manufacturing costs of energy-intensive materials such as steel, cement and glass. It also points to wider effects on material availability and supply chain predictability.

4. Materials remain expensive, but the picture has changed

It would be misleading to say that all construction materials are currently experiencing rapid inflation. The Office for National Statistics reports construction output price growth of 1.9% in the year to June 2026. That is considerably more moderate than the extreme increases seen earlier in the decade.

Output prices reflect what is charged for construction work, and material costs tell a more varied story. The Department for Business and Trade’s construction building materials statistics show the material price index for all work rose by 6.0% in the 12 months to June 2026, and by 5.7% for repair and maintenance. Within those figures, prices moved in very different directions. Fabricated structural steel rose by 17.7% and rigid pipes and fittings by 12.0%, while cement fell by 4.5%.

This reflects how differently individual materials behave:

• Steel is exposed to energy and global commodity prices.
• Copper is affected by global demand and electrical infrastructure.
• Cement is highly energy intensive.
• Bricks are both energy intensive and subject to manufacturing capacity.
• Mechanical, electrical and plumbing (MEP) equipment is affected by manufacturing capacity and long lead times.
• Imported products are exposed to exchange rates, freight costs and geopolitical disruption.

Exposure to energy costs does not always translate directly into higher prices, as the fall in cement prices over the same period shows. The current challenge is therefore increasingly one of volatility and product-specific inflation rather than blanket material inflation.

How we are responding

Many of these pressures sit across the wider market, but there are practical steps we are taking to manage their effect on claims costs and service:

• Network alignment: re-aligning our existing supplier network to reflect volumes, productivity assumptions and geographic coverage.
• Specialisms: using specialisms to focus workload, directing more volume to specific suppliers and reducing spend.
• Video calling: using video calls, where appropriate, to reduce resourcing requirements.
• Automation: using technology to automate administrative work so that skilled claims handlers can spend more time on complex claims.

Autumn and winter are traditionally the busiest period for household property claims. If you would like to talk through how these cost pressures could affect your portfolio over the coming months, a member of our team would be happy to help.