Economic News

Construction Costs Surge as Material Prices Skyrocket in 2023

Published by
WIlliam Dube
  1. Significant month-on-month changes were observed in various work groups, with stainless steel work, plumbing, and metal roofing indices experiencing notable increases.
  2. The construction input price index (CIPI) saw an annual change of 9.1% in March 2023, with electrical components, ready-mix concrete, and paints among the industries with the most noteworthy changes.
  3. Mechanical and electrical engineering input price indices also experienced annual increases, while the civil engineering material price indices recorded a slight month-on-month decrease.

STATS SA has released the latest contract price adjustment provisions (CPAP) work group indices, revealing significant month-on-month changes in March 2023 across several work groups and industries.

The most notable changes were observed in the following work groups:

  • Work group 141 (stainless steel work) saw an 8.2% increase in the index, driven by a 34.7% change in the SEIFSA index for stainless steel flat products cold rolled 316b (accounting for 25.0% of this work group).
  • Work group 148 (plumbing) experienced a 4.5% increase in the index due to changes in the PPI for non-structural ceramic ware (12.5%) and the SEIFSA index for stainless steel flat products cold rolled 316b (34.7%).
  • Work group 124 (metal roofing – steel) recorded a 3.5% increase in the index, influenced by a 3.9% change in the SEIFSA index for galvanized sheets (accounting for 85.0% of this work group).
  • Work group 162 (electrical reticulation) saw a 3.3% increase in the index, with changes in the SEIFSA index for copper 7.9 mm rod (3.9%), aluminium products 99.7 EC grade rod (3.3%), and galvanized sheets (3.9%).
  • Work group 110 (concrete, excluding formwork) experienced a 2.5% decrease in the index, primarily due to a -6.1% change in the PPI for cement (accounting for 45.0% of this work group).
  • Work group 140 (aluminium work) recorded a 2.8% decrease in the index, driven by a -5.2% change in the PPI for aluminium products (accounting for 60.0% of this work group).

The construction input price index (CIPI) showed an annual change of 9.1% in March 2023, with a 0.8% increase month-on-month. Noteworthy changes were observed in electrical components (8.4%), ready-mix concrete (6.3%), paints (3.8%), builders’ carpentry of wood (3.5%), adhesive and sealant (3.2%), bituminous mixtures (3.2%), and cement (-6.0%).

The mining and construction plant and equipment price indices experienced an annual change of 6.9% in March 2023 and a 0.2% increase month-on-month.

In mechanical and electrical engineering input price indices, the annual change for mechanical engineering was 5.9% in March 2023, with a 1.4% increase month-on-month. The annual change for electrical engineering was 6.5% in March 2023, with a 1.3% increase month-on-month.

Lastly, the civil engineering material price indices recorded an annual change of 7.4% in March 2023, with a 0.8% decrease month-on-month.

These changes in input prices across various industries and work groups are likely to impact project costs and overall construction and engineering market trends in the coming months.

WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on william@rateweb.co.za

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Published by
WIlliam Dube

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