Inside the Story: A Deep Dive

Ghana’s building-cost inflation edged higher for the second straight month in June as soaring machinery, equipment and installation-material costs outweighed declines in cement, steel and labour prices, highlighting new cost pressures for developers despite a broader easing in construction inflation.

The Prime Building Cost Index (PBCI) rose 3.10% year-on-year in June, up from 2.70% in May, according to the Ghana Statistical Service. While the increase marks a modest acceleration, it remains far below the 18.10% recorded a year earlier, signalling that inflationary pressures across the construction sector have eased significantly.

The main source of concern shifted away from traditional building materials toward machinery and specialised equipment. Plant and equipment costs surged 16.00% year-on-year, accelerating sharply from 9.80% in May, while prices climbed 5.10% during June alone. Despite representing only 4.00% of the index, the category accounted for more than a fifth of the increase in overall building inflation.

Materials, which carry the largest weighting in the index, also recorded higher inflation at 3.90%, driven by steep increases in plumbing materials, roofing sheets, electrical installations and glazing products.

However, the report also delivered positive news for builders at the structural phase of construction. Cement prices fell 13.00%, steel declined 8.60%, while aggregate and timber prices also eased, helping to moderate overall project costs.

Labour costs provided additional relief. Overall labour inflation remained negative at -2.60%, reflecting lower wages for both skilled and unskilled construction workers and offsetting part of the increase in machinery and material costs.

The contrasting trends suggest developers may benefit from lower costs during the early stages of construction but continue to face significant financial pressure as projects move into roofing, electrical, plumbing and finishing works, where imported equipment and specialised materials dominate expenditure.

For contractors, the data underscores the importance of reviewing procurement strategies and incorporating price-adjustment clauses into contracts as cost pressures become increasingly concentrated in specific input categories rather than across the entire construction sector.

The Ghana Statistical Service said the latest figures indicate that construction inflation has largely stabilised after a year of rapid disinflation, but warned that persistent increases in machinery and installation costs remain a key risk to project budgets and public infrastructure delivery.