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Saudi Arabia’s Construction Cost Index (CCI) increased 2.2% year on year in September 2026, reaching 104.05 points (reported as 104.0 when rounded). Residential construction costs rose 2.1%, while non-residential costs climbed 2.6%. The index was unchanged from August, so September’s result signals continuing annual inflation rather than a new monthly surge. Equipment and machinery rental was the fastest-rising broad component, up 4.4%, while energy increased 3.0%, basic materials 1.7% and labor 1.6%.
What did Saudi Arabia’s Construction Cost Index show in September 2026?
The General Authority for Statistics (GASTAT) reported a general CCI of 104.05 points in September 2026, compared with 101.77 in September 2025. DataSaudi displays the same general index rounded to 104.0; the difference is display precision, not a conflicting result. The series uses 2023 as its base year and tracks monthly movements in construction-input costs across general, residential and non-residential categories.
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Why did construction costs rise?
Equipment and machinery rental made the largest contribution among the major input groups, rising 4.4% year on year. Energy costs increased 3.0%, while basic materials and labor rose more slowly. The pattern points to concentrated pressure in equipment, energy and selected materials rather than a broad acceleration across every input.
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| CCI component | Annual change, September 2026 | Component weight |
|---|---|---|
| Basic materials | +1.7% | 48.5% |
| Labor | +1.6% | 29.9% |
| Equipment and machinery rental | +4.4% | 19.0% |
| Energy | +3.0% | 2.5% |
Because materials and labor carry larger weights than energy, their moderate increases still matter substantially to the overall index. Conversely, the sharper rental increase is a warning for projects that rely heavily on cranes, earthmoving equipment, lifting gear or other hired machinery.
Are residential or non-residential costs rising faster?
Non-residential construction costs rose faster: 2.6% year on year versus 2.1% for residential work. Non-residential projects also recorded higher increases in every major component reported for the segment.
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| Sector | Share of CCI basket | Annual CCI change | Materials | Labor | Equipment rental | Energy |
|---|---|---|---|---|---|---|
| Residential | 77.5% | +2.1% | +1.7% | +1.5% | +4.1% | +3.0% |
| Non-residential | 22.5% | +2.6% | +1.8% | +2.0% | +5.8% | +3.0% |
Rental equipment supplied with an operator rose 5.5% in residential construction and 7.2% in non-residential construction. That gap can be material for commercial, industrial and infrastructure projects with intensive plant and operator requirements.
Did costs increase from August to September?
No. GASTAT’s overall CCI was unchanged between August and September 2026. The 2.2% figure compares September 2026 with September 2025, so it should not be read as a one-month jump. For estimating, the distinction separates a persistent annual cost drift from a sudden monthly shock.
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A separate business survey provides broader market context. The Al Rajhi Capital Saudi Construction Index, compiled by S&P Global, remained in expansion territory for a fifth consecutive month, easing to 54.4 in September from 55.4 in August. This is a survey-based activity measure, not a component of GASTAT’s CCI.
What does the result mean for project budgets?
The index is a national input-cost benchmark, not a quotation for a specific building and not a measure of contractor profit. A project’s actual exposure depends on its design, location, contract terms, procurement date and equipment intensity.
Separate annual inflation from monthly movement
Use the 2.2% annual change when updating a baseline against last year, but do not apply it as a presumed September-to-October escalation. The flat monthly reading indicates that near-term costs were stable at the index level during the period.
Model equipment exposure explicitly
Projects dependent on hired machinery should test scenarios above the 4.4% overall equipment-rental increase, especially where operated equipment is central to delivery. Non-residential work had a 5.8% equipment-rental increase and a 7.2% rise for rental equipment with an operator.
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Keep materials and labor assumptions visible
Materials account for 48.5% of the general basket and labor for 29.9%. Their 1.7% and 1.6% increases may look modest, but their weights mean they can dominate a project’s blended escalation. Contracts should identify which inputs are fixed, indexed or subject to remeasurement.
Review procurement and phasing
Where schedules allow, owners can compare early equipment reservations, supplier quotations and phased purchasing against the project’s cash-flow plan. The CCI supports contingency and sensitivity analysis; it does not establish that any particular procurement strategy will reduce total cost.
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The CCI’s moderate annual increase sits alongside strong construction activity. Arab News reported a Knight Frank estimate of a Saudi project pipeline worth $2.07 trillion in the first half of 2026, with construction output forecast at $190.4 billion in 2026 and $250.2 billion by 2030. Those are consultancy estimates, not GASTAT index measurements.
EnterpriseAM reported that JLL raised its 2026 Saudi tender-price-inflation forecast to 5%. That forecast is a separate forward-looking estimate and should not be substituted for the CCI’s 2.2% September year-on-year reading.
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What should contractors and owners monitor next?
- Monthly CCI releases to see whether the September plateau persists.
- Equipment-rental and operated-equipment subcomponents, particularly for non-residential work.
- Energy and material categories with project-specific exposure, including timber and joinery noted in contemporaneous reporting.
- Labor-market and supplier quotations that may move differently from the national index.
- Contract escalation clauses and the index definition they reference.
Frequently Asked Questions
Is the 2.2% Saudi construction increase a monthly or annual figure?
It is a year-on-year comparison between September 2026 and September 2025. GASTAT reported no change in the overall index from August to September 2026.
What base year does Saudi Arabia’s Construction Cost Index use?
The CCI uses 2023 as its base year. An index level of 104.05 therefore represents the measured level relative to that base, not a 104.05% increase in construction prices.
Does the CCI measure building prices or contractor profits?
No. It measures movements in selected construction inputs, including materials, labor, equipment rental and energy. A project’s sale price, margin and site-specific costs can differ substantially.
Why might a commercial project experience more inflation than a house?
Non-residential construction recorded a 2.6% annual increase versus 2.1% for residential work, with faster labor and equipment-rental increases. Commercial and industrial projects may also use more operated machinery, whose non-residential rental increase was 7.2%.
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