Think inflation is high on products you buy? Cost of infrastructure work in London rising twice as fast as Toronto

Construction in London impacted by inflation The cost of infrastructure work in London is rising twice as fast as Toronto - CTV's Daryl Newcombe explains why.

Statistics Canada’s latest reporting of non-residential construction prices in London indicates that the cost of infrastructure projects rose 6.6 per cent year-over-year in Q3 of 2024.

Only recently was London added to the list of Canadian cities included in the monitoring of Non-Residential Construction Price Index (NRCPI), previously city hall used Toronto’s figure for local budget projections.

“Over the course of the past year, [the NRCPI] for London has been 6.6 per cent, which is in fact, much, much higher than even Toronto and Ottawa,” Kyle Murray, Director of Financial Planning and Business Support told city council during recent budget deliberations.

Over the same period Toronto’s NRCPI rose 3.3 per cent.

The soaring cost of infrastructure projects has already impacted several mega-projects in London with budget overruns and delayed starts.

The Adelaide Street Rail Underpass cost $29.3 million more than its original budget, the most recent estimate to replace and widen the Wharncliffe Road Rail Overpass (at Horton) has risen by $39.6 million in recent years, and the Bus Rapid Transit (BRT) project will cost $174.2 million more than originally planned.

Councillor Steve Lehman wants senior levels of government to consider London’s higher inflation rate when major infrastructure projects receive funding.

“If we want more housing and more infrastructure that comes with that housing,” Lehman tells CTV News. “We definitely need help on the capital side [of the municipal budget] and the inflation that we've seen - it’s getting worse every day.”

Replacement of the Wharncliffe Road Rail Overpass and the widening of northbound lanes is on hold after council decided not to fund the budget shortfall in the current 2024-2027 Municipal Budget.

Plans to improve traffic flow through the intersection of Wharncliffe and Oxford had its funding redirected to fill the budget gap for the Adelaide Street Rail Underpass.

“Wharncliffe should have been done by now – but we haven't even started. That’s because of capital pressures that have been brought to bear,” Lehman says. “The problem doesn't go away on Oxford Street going through Wharncliffe.”

In November, the Consumer Price Index (CPI) that measures inflation on commonly purchased household items eased to 1.9 per cent.