Evaluation of the extent of the impact of inflation on construction material prices in Uganda.

Abstract

It is the aim of many countries to maintain a relatively stable price level of goods and services. Unfortunately, this appears to be a complicated task due to the influence of inflation currently ravaging developing economies, particularly those in third world countries. Inflationary increase in the price of construction materials has been one of the major hinderances to development and a contributing factor to common cost overruns, project disputes and subsequent project abandonment in the worst cases. The research studied the effect of inflation on construction material prices in Uganda from 2018 to 2022 with 2017 as the base year using Kampala city as the study area. The research study was aimed at establishing a relationship between inflation and construction material prices. A well structured and comprehensive literature review was drafted to cover inflation, the Ugandan economy and how they relate to the construction industry in Uganda. Statistical data was collected from the Uganda Bereau of Statistics and other relevant online sources. Inferential analysis was carried out on the data and the results inferred that there existed a relationship between the construction material prices and the inflation rates for materials with a higher Pearson’s correlation coefficient. From the literaure review and descriptive data analysis carried out, it was observed that Uganda’s inflation rates have been far from stable and have affected material prices non-uniformly. Other macro-economic factors such as importation, interest rate, gross domestic product (GDP) and government policies also contribute to the upward trends in price movement. The study has therefore advocated for a systematic reduction in the level of imports of construction materials, more involvement of construction professionals in government policy making, more use of locally made building materials and the development of of the country’s construction data base to enable more realistic estimating and and cost planning.