The first half of 2023 saw the Tender Price Index (TPI) in Ireland recorded at 2.5 percent, which was a significant cooling off from the high inflation seen in 2021 and 2022. With pressure still on some parts of the market, we expect a similar level for the second half of the year, rounding off at around five percent - close to our forecast at the start of this year.

Contractors have a similar but slightly lower average view for this year and suggest a further reduction in the level of increase over the next two years. However, this is in light of continued pressure on wages driven by scarcity and continued cost of living difficulties.

There remains some material price volatility, and notably a reluctance still from suppliers to fix costs beyond 30 days, but the levels of competition expected suggest that contractors are expecting to be able to absorb or contain the potential increases.

With a high degree of public-funded works, the introduction of the inflation mechanism into the Public Works Contract has lowered the risk profile. Adjustments to material prices beyond agreed minimum limits are dealt with under variation clauses in the contract allowing more realistic pricing, with lower risk allowances required to cover for potential fluctuations.