(The Center Square) – Housing puts the most significant inflationary pressure on Alaskans as slowdowns have occurred in transportation, food, and beverage prices, according to the Alaska Department of Labor and Workforce Development.
Inflation in Alaska has been slowly cooling after hitting a 41-year high of 8.1% in 2022, the department said in its July issue of Alaska Economic Trends. While the years of highest inflation were in the 1970s and early 1980s, last year tied for the fifth-highest since Alaska has been tracking the state’s consumer price index.
Alaska was the fifth-priciest state in the nation in 2022. The only states more costly than Alaska last year were New York, California, Massachusetts, and Hawaii, the report said.
While Alaska’s housing inflation is down from its peak in 2022, it has remained at least even with, if not above, the overall inflation rate, according to the report.
“Shelter, which makes up about 75% of housing costs in the CPI and about a third of all costs, is the biggest reason overall inflation was still high through April,” the report said. “If we exclude shelter from the overall inflation calculation for April, the rate falls to 1.1%.”
Alaskans are seeing decreased food prices, with a slight decline of -0.5% in overall costs. Meat and egg prices are dropping after a peaking last year.
Transportation inflation dropped to 0.4% in April after a spike to 20% at the beginning of 2022, the report said. Used car and truck prices have decreased, though new car prices continue to increase.
Alaska’s inflation rate has fallen further than the national rate, according to the report. Alaska’s was 3.1% in April, while the U.S. inflation rate was 4.9%. The most significant difference in inflation between Alaska and the U.S. is food and beverage prices, according to DOLWD. While Alaskans have seen food and beverage prices slightly decrease, nationally, food and beverage prices are 7.5% higher than last April.
While Alaska is seeing encouraging slowing trends, the report said it’s too early to see any signs of stabilization.
“While there’s no ‘normal’ inflation rate, inflation that is both low and stable is considered favorable, and several developed nations’ central banks, like the U.S. Federal Reserve, set 2% as a long-term inflation target,” the report said. “The two bimonthly 2023 releases available at press time put Alaska on track for lower annual inflation than the previous two years, but overall inflation for 2023 won’t be available until early 2024.”