In a report by Brian Smith of Aecom, rising materials prices are causing capacity pinch-points in the market. This is leading to intense competition where spare capacity exists, putting margins under greater pressure. The tender price index saw a stall in inflation in the first half of 2024 due to competitive pressure. However, capacity constraints are expected to resurface, leading to a forecasted return of tender price inflation in the second half of the year. Building cost index is also on the rise, with wage inflation slowing but materials prices putting upward pressure. Aecom’s composite measure of building input cost inflation rose at an annualized rate of 3% in the second quarter. Consumer prices index shows a slowdown in the annual rate of inflation to 2.3% in April, down from 3.2% in March, with service sector inflation at 5.9% being the main driver.