NCR building materials wholesale price growth slows in August

WHOLESALE PRICE GROWTH of construction materials in Metro Manila eased in August, while retail price growth remained unchanged, the Philippine Statistics Authority (PSA) reported on Monday.

According to preliminary data, the PSA said the August construction materials wholesale price index (CMWPI) slowed to 0.3% from 0.5% in July and 5.6% a year earlier.

This was the weakest pace in over 14 years or since the 1.85% decline in October 2009.

Year to date, the CMWPI averaged 0.7%, significantly lower than the year-earlier 7.1%.

Robert Dan J. Roces, chief economist at Security Bank Corp., said construction materials prices in Metro Manila cooled, pointing to a lowering in project costs for builders.

“Factors like easing inflation are likely contributing to this trend,” Mr. Roces said via Viber.

John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said the slowdown in construction materials prices reflects weak demand.

The state of demand may be gleaned from weak construction permit approvals, the resulting slowdown in construction activity, and relatively high interest rates, he said via Viber.

Headline inflation in August slowed to 3.3% from 4.4% in July and 5.3% in August 2023, the weakest reading in seven months.

Inflation for that month settled within the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target for the year.

 In its Aug. 15 Monetary Board Meeting, the BSP cut benchmark interest rates by 25 basis points (bps) to 6.25%, its first cut in nearly four years.

BSP Governor Eli M. Remolona, Jr. also signaled another rate cut before the end of the year.

Prior to the rate cut, the central bank kept its policy rate at an over 17-year high of 6.5% for six straight meetings following cumulative hikes totaling 450 bps between May 2022 and October 2023.

The PSA said that the deceleration in the August CMWPI was led by the slowdown in the metal products sub-index to 0.3% from 1.1% in July.

Slower growth was also recorded in commodity groups like fuels and lubricants (3.5% in August from 12.9% in July) and electrical works (2.9% from 3.1%).

The following commodity groups also saw their growth rates ease: painting works (1.2% from 1.3%), hardware (0.9% from 2.6%), plywood (0.4% from 1.1%), structural steel (0.2% from 0.7%), and G.I. sheets (0.4% from 0.1%).

Meanwhile, price growth accelerated in PVC pipes (1.4% from 1.3%), doors, jambs, and steel casements (1.2% from 1%), and plumbing materials (1.1% from 1.0%).

Price declines were recorded in the sub-indices of reinforcing steel (-1.2% from -1% a year earlier), followed by tileworks (-1.2% from -0.8%).

Metal products also contracted in August by 0.3%, a turnaround from the 1.15% posted a year earlier.

The CMWPI is based on constant 2018 prices.

In a separate report, PSA preliminary data showed that retail price growth in construction materials was flat in August at 1.1% but lower than the 1.4% posted a year earlier.

The August reading represents the weakest rise in two months or since the 1% posted in June.

In the eight months to August, the CMRPI averaged 1.1%, well below the year-earlier 3.1%.

“We might see faster movements when construction activities go full blast again when construction companies find it lucrative to borrow,” Mr. Rivera said. — Abigail Marie P. Yraola