Inflation rate in Alaska down to lowest since February 2021

Inflation in Alaska is dropping sharply this year after hitting a 41-year high in 2022, but it still remains unstable overall and uneven in some categories such as housing, according to a report published July 5 by the Alaska Department of Labor.

The statewide inflation rate was 8.1% in 2022, but as of April this year was down to 3.1%, the lowest since February 2021, according to the current issue of Alaska Economic Trends, which is published by the department.

“While it’s uncertain how long it will continue slowing, the rate in April approached historical averages,” the report states. “Alaska’s average annual inflation rate over the past 61 years was 3.4%, and yearly rates fell between 0 and 4% in 44 of those years. Many of the outliers came before 1985 and were bunched in that period of unusually high inflation.”

Both the increase and drop in inflation occurred at different rates over the years — sometimes drastically — for different costs. Housing, for instance, was among the categories seeing the biggest increase in 2022 and remains an ongoing issue this year.

“Housing is putting the most upward pressure on Alaska inflation in 2023, especially given that consumers spend more on housing than any other category, giving it more weight,” the department’s report states, noting Alaskans spend an average of 40% of their consumption dollars on housing, compared to the nationwide average of 28%.

“In 2022, the average single-family home (in Alaska) cost $422,484. Average prices ranged from a low of $337,329 in Fairbanks to a high of $513,119 in Juneau” the Alaska Economic Trends report notes, adding Juneau’s housing costs were the 28th highest among 265 cities surveyed nationally. Those 265 cities in the survey included only four from Alaska: Anchorage, Fairbanks, Juneau and Kodiak.

Juneau’s housing costs during 2022 were 42.3% above the national average, according to the U.S. Council for Community and Economic Research.

The Department of Labor article did not list home prices in Wrangell but did report on rents. It listed median adjusted rental rates for a two-bedroom apartment as of March in a dozen Alaska regions, with Wrangell-Petersburg, at $1,055 a month, coming in at the lowest rate.