Construction became 4.1% more expensive year-over-year – what caused the growth?

Georgia's construction sector witnessed notable cost pressures in May 2026, with the National Statistics Service reporting a month-on-month price increase of 0.5% and a more significant year-on-year surge of 4.1%. The divergent performance across construction segments revealed a complex market landscape, as residential construction costs edged up by just 0.3% annually despite a monthly dip of 0.5%, while non-residential projects experienced steeper annual inflation at 7%.

The civil engineering segment emerged as a standout performer, recording consecutive growth rates of 1.5% month-on-month and 6.8% annually. These increases underscored broader inflationary pressures reshaping the construction industry's cost structure. Transportation, fuel, and electricity expenses dominated the year-on-year expansion, rising 17.2% and accounting for 2.06 percentage points of the overall index movement. Additionally, average nominal wages for construction workers climbed 1.1%, contributing another 1.12 percentage points to annual price growth.

At the monthly level, building material costs proved the primary driver of inflation, increasing 0.6% and pushing the overall index higher by 0.35 percentage points. The persistent upward trajectory reflects the cascading effects of global supply chain dynamics and operational expenses. Perhaps most striking, the construction cost index has surged 26% since February 2022, illustrating the cumulative impact of inflationary forces over the past four years on Georgia's building sector.