Q3 2026 Philippine Construction Market Insights

Construction cost pressures in the Philippines intensified again during Q3 2026. Continued disruption in the Middle East pushed oil prices and inflation higher, the peso fell to record lows, and the NCR minimum wage increase took effect late in the quarter.

Headline inflation eased from 6.4% in June to 6.2% in July and 6.1% in August, then jumped to 7.2% in September, the highest since March 2023. Core inflation rose to 4.7%, showing that price pressures remain broadly embedded.

Construction-specific inflation remained elevated. Year-on-year growth of the Construction Materials Wholesale Price Index in NCR rose from 2.9% in June to 3.5% in July and 3.6% in August, before easing slightly to 3.4% in September.

The largest increases were in painting works, fuels and lubricants, asphalt, sand and gravel, and concrete products. Cement and reinforcing steel also increased.

Crude Oil has climbed back to around USD109 per barrel, and Brent reached USD110. Metro Manila diesel is now about PHP91 per liter, compared with roughly PHP55 before the conflict, keeping freight, equipment, and logistical costs high.

The PHP60-per-day NCR wage increase took effect on 26 September, an increase of about 8.6%. A court injunction has suspended the remaining increase under Wage Order NCR-27, but this could be reinstated.

The peso touched a record low of PHP63.23 to the US dollar, raising the cost of imported steel, equipment and fixtures, and Meralco’s rate reached PHP15.06/kWh in October.

Construction output contracted 14.8% in Q2, and government infrastructure spending was down 36% year-to-date as of July. Weaker demand may limit contractors’ ability to pass costs on but is unlikely to offset input-cost escalation.

Construction costs are expected to keep trending upward through Q4 and into 2027. The pace will largely depend on oil prices, the outcome of the NCR-27 case, the peso to dollar exchange rate, and the BSP’s interest-rate decisions.

Projects in design, tendering and early procurement remain most exposed. Updated supplier quotations, package-specific escalation allowances, early procurement of critical materials and appropriate contingencies remain essential to managing budget risk

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About Hearn & Hearn Consulting

Hearn & Hearn Consulting is an independent construction consultancy based in Makati City providing Acoustic Consulting, Commercial Management, Project Management, Green Building, Contract Advisory, Facilities Management, and Technical Due Diligence services. With over 40 years of combined experience across the Philippines, UK, Middle East, and Asia Pacific, the firm is the only RICS-regulated surveyor practice in the Philippines and an affiliate of leading green building certification bodies locally and internationally.