KATHMANDU: Nepal’s construction sector is facing mounting cost pressure, with the Construction Input Price Index rising sharply in the third quarter of fiscal year 2025/26, according to a report published by the National Statistics Office.
The overall construction cost index reached 157.6 in the Mangsir–Chaitra quarter, marking a 3.60 percent increase compared to the previous quarter.
The rise has been largely driven by a significant jump in construction material prices, particularly bricks, steel, and electrical wiring. The construction material sub-index climbed 5.33 percent to 138.6.
Brick prices recorded one of the steepest increases, rising 9.33 percent quarterly and 13.41 percent annually, reaching an all-time high index level of 147.2. The report attributes this surge to supply disruptions in brick kilns and strong seasonal construction demand.
Electrical wiring costs also saw a sharp annual increase of 24.89 percent, driven by rising copper prices in the international market. Prices of iron rods and billets increased by 7.79 percent, while cement rose by 5.04 percent. However, prices of Hume pipes, timber, and tiles declined due to a slowdown in the real estate sector.
Labor costs have also continued to climb steadily. The wage index crossed the 200-point mark for the first time, reaching 203.0—meaning construction wages have more than doubled compared to the base year 2071-72.
Wages increased 0.91 percent on a quarterly basis and 2.81 percent annually. Among occupational groups, painters saw the highest wage growth at 5.98 percent, while general laborers—the largest workforce segment—recorded a 2.97 percent annual increase.
The report notes that the Mangsir–Chaitra period is the peak construction season in Nepal, leading to higher demand for materials. Increased government capital spending toward the end of the fiscal year has also pushed up demand and prices of key inputs such as gabion wire, GI pipes, and bitumen.
External factors have further contributed to the price pressure. Uncertainty in US tariff policies and rising steel prices in the Indian market have had a spillover effect on Nepal’s construction sector.
The National Statistics Office warned that the continued rise in construction costs could increase the overall cost of ongoing infrastructure projects and may require contract price adjustments. It has recommended closer monitoring of volatile inputs, particularly bricks and electrical wiring, and improved supply chain management.
The index uses fiscal year 2014/15 as the base year (100), with construction materials carrying a 70.5 percent weight and labor wages 29.5 percent.
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