A worker cuts metal in a construction area in Binondo, Manila on March 24, 2022. — PHILIPPINE STAR/RUSSELL PALMA

THE growth in wholesale prices of construction materials in Metro Manila eased to a 15-month low in May as high borrowing costs dampened construction demand.

According to preliminary data from the Philippine Statistics Authority (PSA), the construction materials wholesale price index (CMWPI) in the National Capital Region (NCR) grew 6.5% year on year in May, against the 7.4% posted in April and the 8.3% from a year earlier.

In the first five months, index growth averaged 8%, against the 6.5% growth rate seen in 2022.

Metro Manila's Construction Materials Retail Price Index

The May reading was the weakest since the 5.2% growth posted in February 2022.

“Slowing construction materials inflation may be traced to softer construction activity as rate hikes sap demand,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message on Tuesday.

Since May 2022, the Bangko Sentral ng Pilipinas has raised policy rates by 425 basis points to curb surging inflation.

The impact of policy tightening has since found its way into market prices as headline inflation slowed for a fourth straight month to 6.1% in May.

“The main contributor to the lower annual growth rate of CMWPI was the heavily weighted reinforcing and structural steel index, which registered annual growth of 4.1% in May from 6.5% in April,” the PSA said.

Of the 17 commodity groups, seven registered slower price growth, led by hardware (6% in May from 6.8% in April), plywood (4.3% from 4.8%), lumber (6.2% from 7%), G.I sheets (13.8% from 14.3%), doors, jambs, and steel casements (5.2% from 5.4%), and painting works (12.4% from 13.1%).

Growth in wholesale prices for concrete products accelerated to 9.1% from 9% in the previous month. Higher price growth was also reported for tileworks (1.4% from 1.3%), electrical works (6.3% from 6.2%), and plumbing fixtures and accessories/waterworks (4.2% from 3.9%).

Price growth declined for glass and glass products (0.2% from 0%), PVC pipes (3.7% from 1.3%), and fuel and lubricants (19.4% 11.9%).

Growth in wholesale prices for sand and gravel was unchanged at 4.7%.

Mr. Mapa expects the downward trend to continue as rate hikes “continue to whittle away at construction demand.” — Mariedel Irish U. Catilogo