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Metro Manila construction material retail price growth slowest in 11 months

RETAIL price growth of building materials in the National Capital Region eased to 5.4% in February from 5.5% in January, falling to the lowest growth rate in 11 months, according to preliminary data from the Philippine Statistics Authority (PSA).

Growth in the construction materials retail price index (CMRPI) in Metro Manila was the weakest since the 4.8% posted in March 2022.

The year-earlier CMRPI rose 3.3%.

Metro Manila's construction materials retail price index

February was the seventh straight month of easing growth in retail building materials prices, after hitting 7% in July 2022.

Year to date, retail construction prices rose 5.5%, against the year-earlier 3.2%.

Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila said the CMRPI reading indicates that “several factors are at play.”

“Global commodity prices have moderated from the highs of 2022 while a more stable currency translates to slowing growth for construction materials,” Mr. Mapa said in an e-mail.

Lower global prices for commodities help bring down construction costs, while a stable or strong peso makes imported construction materials cheaper, he said.

“On top of the cost side, demand for construction activity may also be slowing given the rapid-fire rate hikes carried out by the central bank.”

The Bangko Sentral ng Pilipinas has raised interest rates by a cumulative 400 basis points since May 2022 which brings the policy rate to a 16-year high of 6%.

The BSP was responding to inflation accelerating to 8.7% in January compared with 8.1% in December.

February inflation has since eased to 8.6%, breaking a run of six months of acceleration, according to the PSA.

The PSA attributed the continued slowdown of CMRPI to the heavily-weighted tinsmithry materials index, where price growth slowed to 5.9% in February from 7.1% in January.

Also slowing was price growth in plumbing materials, which hit 4% in February from 4.4% a month earlier.

Price growth accelerated in four commodity groups, led by miscellaneous construction materials (9.3% in February from 8.5% in January), masonry materials (4% from 3.6%), painting materials and related compounds (5.6% from 5.2%) and carpentry materials (3.8% from 3.5%).

Growth in retail prices for electrical materials remain unchanged at 3.1%.

“Policy tightening does have a substantial impact on capital outlays such as construction and we can expect overall prices for construction materials to continue expanding, albeit at a slowing pace,” Mr. Mapa said. — Abigail Marie Pelea Yraola