Price index for building construction work in Japan FY 2013-2022

In the fiscal year 2022, the Japanese construction cost deflator for buildings stood at 120.8 index points, increasing from 113.9 points in the previous year. The construction cost deflator is a weighted index estimating the inflation-adjusted price development of construction in Japan, considering expenditures for materials, labor, and investment.

What are features of the construction cost deflator?

Since 1951, the government has been compiling a deflator for construction costs. It helps, for example, to determine contract prices for public works like roads. Today’s version includes various sub-indices, such as the one for buildings; they may be residential or non-residential, and their structural frames may be either wood, steel, or reinforced concrete. While the deflator considers all of Japan, other price indices give more detailed insight into specific buildings, materials, and regions.

Rising energy-prices have spilled over to materials

Japan has not been spared by recently inflating energy prices. Accordingly, the domestic construction industry is monitoring the monthly construction material price index. Unlike the deflator, it also provides regional-specific data, showing that although inflation impacted all materials throughout the country, some materials and places were more affected than others. In Tokyo, cement prices have increased by around 14 points – in Osaka, by nearly 20. Except for a few items like lumber, economists expect materials prices to remain high and to grow.