Connection refused by postgresql docker container when connecting via Flask docker container

I have flask application that connects to PostgreSQL and works well in a single installation. However when I containerise it using docker into separate containers, flask app is unable to connect to PostgreSQL and the error received is psycopg2.OperationalError: could not connect to server: Connection refused

provide below is the code for app.py

app = Flask(__name__)

app.config['basedir'] = os.path.abspath(os.path.dirname(__file__))
app.config['DEVELOPMENT'] = True
app.config['DEBUG'] = True

POSTGRES = {
    'user': 'postgres',
    'pw': 'postgres',
    'db': 'postgres',
    'host': 'localhost',
    'port': '5432',
}
app.config['SQLALCHEMY_DATABASE_URI'] = 'postgresql://%(user)s:%(pw)[email protected]%(host)s:%(port)s/%(db)s' % POSTGRES
app.config['SQLALCHEMY_TRACK_MODIFICATIONS'] = False

api = Api(app)

from database.postgresql import db
db.init_app(app)

if __name__ == '__main__':
    app.run(host='0.0.0.0', port=5000, debug=True)

the app is deployed using app server uwsgi and provided below is the app.ini file contents

[uwsgi]
module=wsgi:app
wsgi-file = app.py
callable = app
socket = :8080
processes = 4
threads = 2
master = true
chmod-socket = 660
vacuum = true
die-on-term = true

the error stack is as follows

  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/engine/base.py", line 2336, in _wrap_pool_connect
    return fn()
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/base.py", line 364, in connect
    return _ConnectionFairy._checkout(self)
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/base.py", line 778, in _checkout
    fairy = _ConnectionRecord.checkout(pool)
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/base.py", line 495, in checkout
    rec = pool._do_get()
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/impl.py", line 140, in _do_get
    self._dec_overflow()
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/util/langhelpers.py", line 68, in __exit__
    compat.raise_(
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/util/compat.py", line 182, in raise_
    raise exception
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/impl.py", line 137, in _do_get
    return self._create_connection()
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/base.py", line 309, in _create_connection
    return _ConnectionRecord(self)
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/base.py", line 440, in __init__
    self.__connect(first_connect_check=True)
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/base.py", line 661, in __connect
    pool.logger.debug("Error on connect(): %s", e)
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/util/langhelpers.py", line 68, in __exit__
    compat.raise_(
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/util/compat.py", line 182, in raise_
    raise exception
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/pool/base.py", line 656, in __connect
    connection = pool._invoke_creator(self)
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/engine/strategies.py", line 114, in connect
    return dialect.connect(*cargs, **cparams)
  File "/usr/local/lib/python3.9/site-packages/sqlalchemy/engine/default.py", line 493, in connect
    return self.dbapi.connect(*cargs, **cparams)
  File "/usr/local/lib/python3.9/site-packages/psycopg2/__init__.py", line 127, in connect
    conn = _connect(dsn, connection_factory=connection_factory, **kwasync)
psycopg2.OperationalError: could not connect to server: Connection refused
    Is the server running on host "localhost" (127.0.0.1) and accepting
    TCP/IP connections on port 5432?
could not connect to server: Cannot assign requested address
    Is the server running on host "localhost" (::1) and accepting
    TCP/IP connections on port 5432?

Source: Docker Questions