Rising wages, increased demand for materials and workers from housing, health, energy and defence projects and a transition to lower-carbon alternatives is driving inflation higher again in infrastructure, a new Oxford Economics Australia report says.

Cost escalation that soared as much as 10 per cent year-on-year in sectors such as roads and ports amid post-pandemic global pressures had come off but was now again picking up due to increasing domestic demand, even as consumer inflation was likely to remain subdued, the report says.