Malawi’s construction cost inflation slowed in the second quarter of the 2026/27 financial year, offering some relief to the industry but persistent foreign exchange shortages and fuel supply challenges continue to erode potential gains, it has emerged.
Figures released by the Construction Industry Regulatory Authority (Cira) in collaboration with the National Statistical Office (NSO) show that the General Construction Input Price Index (GCIPI) rose by 4.4 percent between July and September 2026, compared with 6.2 percent in the preceding quarter.
GCIPI is a weighted aggregate measure of price changes for a broad range of construction materials, equipment and related activities published quarterly by Cira and NSO to track cost movements in the construction sector.
On an annual basis, construction cost inflation declined to 21.3 percent from 28.8 percent in the first quarter, representing a 7.5 percentage-point reduction.
The slowdown suggests easing inflationary pressures although construction inputs remain substantially more expensive than a year earlier, according to Cira.
“The latest report shows that while construction input prices remain elevated, the pace at which prices are increasing has moderated significantly compared to previous quarters, reflecting improving stability within Malawi’s construction industry,” reads the Cira statement signed by chief executive officer Engineer Gerald Khonje.
The moderation was particularly pronounced in civil engineering, where quarterly input price inflation declined to 3.4 percent from 8.1 percent, while annual inflation slowed to 27.9 percent from 32.6 percent.
But the report indicated that building construction recorded a marginal increase in quarterly inflation to 5.1 percent from 5.0 percent, despite annual inflation easing to 17.2 percent from 20.2 percent.
Despite the improving cost indicators, the Reserve Bank of Malawi (RBM) has revised downwards its construction sector growth projection for 2026 to 4.2 percent from an earlier 4.8 percent, which is below the five percent recorded in 2025.
In its Quarterly Financial and Economic Review released in September, the central bank attributed the revision to foreign exchange shortages, rising fuel prices and supply constraints.
Scotland-based Malawian economist Velli Nyirongo said in an interview that the easing inflation figures should be viewed against persistent structural challenges that continue to undermine construction activity.
He said imported materials, expensive financing and transport costs remain significant constraints on contractors, property developers and households.
Said Nyirongo: “Sustained increases in construction costs could have wider economic consequences.
“Government may be forced to delay infrastructure projects or reduce the scale of investment as rising costs place further pressure on an already constrained budget.”
He recommended strengthening domestic production of suitable construction materials, improving economic stability, promoting competition and enhancing public procurement transparency.
The RBM expects ongoing infrastructure projects to sustain activity, with construction sector growth projected to recover to 4.8 percent in 2027.
