Anchorage saw the third year in a row of low inflation in 2017. It was the first time that inflation didn’t rise about 0.5 percent for three years in a row. There have only been four other times when the rate has been lower than it is now, since statehood. 1963 had the lowest inflation in the city’s history when it was 0.3 percent. Three times the rate was 0.4 percent, in 1987, 1988, and most recently in 2016.
Inflation is an important factor in everything. With the low rates in Anchorage, the minimum wage has only been raised nine cents in the past two years. While the rates have been low, there are signs that it is increasing for 2018. We will not know for sure until the numbers for the full year are released.
The national inflation rate was much higher than the rate in Anchorage, but because of the way the rate is calculated, they don’t often follow the same track. Many goods and services respond to national and international markets. Housing is the exception to this rule. Alaska has been in a recession and the Anchorage housing marketing has slowed. The nation’s inflation index for housing has grown while Anchorage has dropped.
Inflation only measures the change in cost in a single place and cannot be used to measure the cost of living between other places. You can measure cost of living in a single place over time or in different places at the same time. Measuring each of the 50 states and DC shows that Alaska’s cost of living is the 7th highest in the nation. Just below, DC, New York, California, Hawaii, Maryland, and Massachusetts. When comparing cities throughout the nation, Anchorage, Fairbanks, and Juneau are not the most expensive throughout all categories. There are 16 cities with higher costs of living than the first city in Alaska on the list, Juneau.
Comparing prices of items in cities throughout Alaska, Juneau has the highest average housing price. A two bedroom house in Juneau cost $394,909 in 2017, while it was $383,830 in Anchorage. Measuring the number of paychecks needed to be able to afford a two-bedroom house. The state average is 1.3. Fairbanks, Kenai and Anchorage were the only cities on the list below the statewide average.
Inflation and cost of living are good measurements of the local and national economy. In these examples, you can measure urban areas against other urban areas. It is difficult to have a clear picture of the full state’s cost of living without looking at the rural areas as well. Rural costs in Alaska are significantly higher than the urban areas.
More details on inflation and the cost of living in Alaska can be found at the Alaska Department of Labor’s July publication of Trends.
