Retail price growth of construction materials in Metro Manila eased in March, the slowest pace in over four years, the Philippine Statistics Authority (PSA) reported on Monday.
Preliminary data from the PSA showed that the construction materials retail price index (CMRPI) slowed to 0.6% year on year in March, slower than the 1.1% recorded in February and 4.1% in March last year.
Growth in the CMRPI in the National Capital Region (NCR) was the weakest since 0.1% in December 2019.
Analysts attributed the slowdown in CMRPI to the slower demand in construction amid elevated interest rates.
Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co., said in a Viber message that there is not much activity in the construction sector due to a cautious expansion plan amid high inflation and higher interest rates.
As of April 2024, the Bangko Sentral ng Pilipinas (BSP) kept policy rates unchanged at 6.5% for a fourth straight meeting as inflation is expected to accelerate in the coming months.
Inflation accelerated for a second month in March to 3.7% from 3.4% in February. Despite the quicker growth, March was the fourth consecutive month that headline inflation was within the BSP’s 2-4% target range.
“With interest rates remaining elevated, consumer propensity to spend on big-ticket items, including commercial and residential structures, is also constrained,” John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said in a Viber message.
From May 2022 to October 2023, the BSP hiked borrowing costs by a cumulative 450 basis points (bps) to tame inflation.
CMRPI in NCR averaged 1.1% in the first quarter, significantly slower than the 5% in the first three months of 2023.
By commodity, the PSA said the slower annual increment in the heavily weighted index of tinsmithry materials was the primary driver of the slower growth of CMRPI.
Tinsmithry eased to 2.4% in March from 3.1% the previous month.
This was followed by masonry materials, which declined to 0.2%, a reversal from 0.4% in February; miscellaneous construction materials (-1.5% from -1.0%); plumbing materials (-0.2% from 0.3%); painting and related compounds (2.0% from 2.1%); and electrical materials (0.9% from 1.0%).
Only carpentry materials inched up to 0.2% in March from 0.1% last month.
Mr. Rivera said the slowdown in CMRPI may continue as there is still no clear indication of interest rates being relaxed in the coming months.
Mr. Ravelas said that a rebound is expected during the dry season, which is good for construction.
“However, higher costs could be the caveat,” he added.
Source: Business World