The Inflation Rate and the Prices of Building Materials in Benin City

Abstract

This study aimed to investigate the relationship between the inflation rate and the price of building materials in Benin City to aid in mitigating the adverse effects of the inflation rate on the construction industry. The trend in the variables from 2017 to 2023 was investigated, and their relationship was assessed and determined using Spearman’s correlation and Regression analysis. Data on the inflation rate was collated from the Central Bank of Nigeria, while prices of the selected building materials were obtained from market surveys. Findings revealed that the inflation rate had the highest value in 2023, and the prices of the chosen building materials had an upward trend from 2017 to 2023. The yearly change in the variables revealed that a percentage increase in the inflation rate produced the highest increase of 3.34% in the price of 1.5mm single-coil cable and the lowest increase of 0.93% in the price of Granite. Correlation analysis indicated that the prices of the building materials had a direct relationship and an inverse relationship with the inflation rate. Regression analysis showed that for every unit increase in the inflation rate, the price of Granite would experience the highest increase by ₦5693. In contrast, the price of Sandcrete block would experience the lowest increase by ₦10. It was recommended that the Government provide an enabling environment that will promote the local production of building materials to reduce dependency on imports and the effect of inflation rate fluctuations.