Construction cost growth slows to a four-month low, but war-sensitive lines are still rising

CCI slows down for the first time this summer: The Kingdom’s Construction Cost Index (CCI) rose 2.3% y-o-y in July 2026, its slowest pace in four months, down from 2.7% in June, according to recent data (pdf) from the General Authority for Statistics. Driving the increase was a 2.2% uptick in residential construction costs and a 2.6% rise in non-residential costs. On a monthly basis, the index held flat against June.

The usual culprits, equipment and labor, drove the increase. On the residential side, equipment and machinery rental costs rose 4.2%, including a 5.7% jump in rentals with operators, alongside a 1.4% rise in labor. Non-residential followed the same pattern: equipment rentals up 5.8%, rentals with operators up 7.3%, and labor up 1.8%.

Materials and energy kept climbing too. Energy prices rose 3% in July. Basic materials rose 1.8% for both segments, with timber and joinery up 3.9% on the residential side and other building materials up 4% on the non-residential side.

Why it matters: Headline cost growth is easing, but equipment rentals and materials — the war-exposed inputs — are still rising amid logistics disruptions and Houthi threats. That matters as Saudi Arabia shifts gigaproject spending toward deadline-bound work like Expo 2030, the 2034 World Cup, and rail. About 75% of contractors surveyed by Meed reported input-price increases of up to 25% since the war began. While the CCI is cooling, costs remain elevated on projects still moving.