The composite Construction Material Price Index, fell by 0.3 percent y-y in May 2025, as construction cost continued to slow since the start of 2025. Following an average 6.1 percent increase in construction materials during 2024, cost inflation slowed to an average of 1.4 percent in the first five months of 2025. A month on month decline in reinforcing steel and cement prices slowed the annual increase in cement to 2.8 percent (in line with consumer inflation), against a near 8 percent decline in reinforcing steel prices. While the lower construction cost inflation bodes well for construction projects, by improving project financial viability, and allowing government to stretch limited budgets, it does suggest weak demand (locally and internationally) and persistent over capacity being experienced by material suppliers. Lower costs may also hurt construction material suppliers and subcontractors, squeezing margins and threatening the sustainability of smaller companies. The current weakening in construction cost inflation is likely linked to demand contraction, weak economic conditions, rather than improved production efficiencies, technological innovation or supply chain improvements. Click here to download the latest Construction Material Price Indices.
