Contractors in Ghana spent less on labour for construction projects in June even as costs for specialized building materials such as plumbing, roofing and electrical works continued to climb, underscoring a shift in the drivers of construction inflation.
The latest Prime Building Cost Index (PBCI) released by the Ghana Statistical Service showed that labour costs fell 2.6% year-on-year in June, making labour the only major building input to exert downward pressure on overall construction inflation. Skilled labour costs declined 1.2%, while unskilled labour costs fell 4.9% compared with the same period last year.
The decline helped moderate overall building cost inflation, which stood at 3.1% in June, up slightly from 2.7% in May but significantly below the 18.1% recorded a year earlier. On a monthly basis, the index edged down 0.1%, indicating that average building costs remained broadly stable between May and June.
The data suggest that hiring workers for construction projects became cheaper than it was a year ago, providing some relief for developers and contractors facing cost pressures elsewhere. Labour accounted for 19.5% of the PBCI basket but made a negative contribution of 16.5% to headline inflation, effectively offsetting part of the increase recorded in other components.
In contrast, specialized materials and equipment continued to drive price increases across the sector. Plumbing recorded the highest annual inflation among all construction sub-groups at 23.9%, followed by roofing sheets (21.4%), small tools (19.7%), reinforcement (18.1%), glazing (17.9%) and electrical works (17.4%).
Although plant and equipment represent only 4% of the overall index, prices in that category rose 16.0% over the past year and increased 5.1% between May and June alone. The sharp rise meant plant and equipment contributed more than one-fifth of total construction inflation despite their relatively small weight.
Materials remained the largest source of inflationary pressure because they account for more than three-quarters of total construction costs. Material prices increased 3.9% year-on-year and explained 96% of headline inflation, even though several key structural inputs became cheaper.
Among the notable price declines were cement, which fell 13.0% year-on-year, steel (8.6%), fine aggregate (5.1%), timber (1.6%), alongside the decline in labour costs.
The divergence suggests that while the cost of constructing the structural shell of a building has eased, developers are increasingly facing higher expenses during the finishing and installation stages of projects, where plumbing, electrical systems, glazing and roofing materials play a larger role.
For contractors, the latest figures point to a more stable construction cost environment than a year ago. However, the data also indicate that procurement strategies are becoming increasingly important as inflation shifts away from broad-based increases in core construction inputs toward specific categories of specialized materials and equipment.
The June PBCI suggests Ghana’s construction sector is transitioning from widespread cost escalation to more targeted price pressures. Lower labour costs and cheaper structural materials are helping contain overall building inflation, but persistent increases in specialized installation materials and equipment remain the key risks for future construction costs.
