Inflation is taking a toll on infrastructure projects
Inflation is taking a toll on infrastructure projects across the U.S. Rising prices for materials such as asphalt, steel and iron pipes are driving up the costs to build roads, bridges, rail lines and water mains. The prices for some infrastructure materials have risen even faster than general consumer prices.
State and local officials say inflation is diminishing the value of a $1 trillion federal infrastructure law signed by President Joe Biden just seven months ago. Some officials say inflation has forced them to delay or scale back the scope of projects.
In addition to roads, the federal infrastructure bill includes billions of dollars for water projects, railways, airports, broadband internet, electric grids and green-energy projects over the coming years.
Inflation has affected the entire U.S. economy, posing one of Biden’s biggest challenges during a midterm election year. Fuel, food and housing costs all have shot up. Consumer prices surged 8.6% in May over last year, the highest rate since 1981, according to the U.S. Department of Labor.
Prices for some key materials in infrastructure construction have risen even more. Prices paid to U.S. manufacturers of asphalt paving and tar mixtures were up 14% in May compared to last year, according to data from the Federal Reserve Bank of St. Louis.
Prices for fabricated steel plate, used in bridges, were up 23%, and ductile iron pipes and fittings — used by water systems — were nearly 25% higher.
The hikes are being driven by a variety of factors, including worldwide supply-chain backlogs, strong consumer and business spending in the U.S., Russia’s invasion of Ukraine — and, some argue, federal energy and fiscal policies.