Market forecast: Materials prices and margins are both set to come under pressure

By Brian Smith 2024-07-11T07:00:00

Source: Shutterstock

Rising materials prices could cause capacity pinch-points. And where spare capacity exists, intense competition could put margins under greater pressure. Brian Smith of Aecom reports

01 / Summary

Tender price index ▲

As competitive pressure builds, tender price inflation stalled in the first half of 2024. Capacity constraints will quickly resurface and, with risk aversion high, tender price inflation is forecast to return in the second half of the year.

Building cost index ▲

Wage inflation has slowed but upward pressure is building on materials prices. Aecom’s composite measure of building input cost inflation rose at an annualised rate of 3% in the second quarter.

Consumer prices index ▲

The annual rate of consumer price inflation slowed to 2.3% in April, down from 3.2% in March. Annual service sector inflation running at 5.9% was the main driver.

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