Market forecast: Prospects for growth in 2025 remain subdued

By Brian Smith 2025-01-13T07:00:00

With capacity depleted, cost pressures have resurfaced as demand has strengthened – but with interest rates set to stay high, slowing demand growth may help smooth the transition

01 / Summary

Tender price index ▲

Tender price inflation strengthened to 2.4% in the year to Q4, up from just under 1% in Q3, as better demand prospects supported the immediate transfer of higher delivery costs to clients and the rate of inflation strengthened throughout the year.

Building cost index ▲

Aecom’s building cost index rose by 3.7% in Q4 as the pace of wage inflation accelerated and upward pressure on materials prices strengthened.

Consumer prices index ▲

The CPI fleetingly dipped below the Bank of England’s 2% target in September – the first sub-2% annual inflation reading since April 2021. In the year to October, CPI rose to 2.3% and January’s energy price cap rise will add pressure.

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