Alaska inflation similar to U.S. trends, but a sharp departure from recent past

The annual inflation rate for the Anchorage area was 7.5% as of April, nearly matching the annual national rate that was most recently measured at 8.2%, the Bureau of Labor Statistics reported last week.

The close match between Alaska and national economic trends is noteworthy, said Neal Fried, a senior economist with the Alaska Department of Labor and Workforce Development.

“It’s one of these unusual times when you can read about something happening nationally and you can localize it,” said Fried, who is working on an article to be published in the department’s monthly Alaska Labor Trends magazine.

Not only were Alaska and national Consumer Price Index trends similar, the breakdown of those trends was also similar, Fried said. One notable example was in the category of used cars and trucks, which showed an annual price increase of 23.1% in the latest report, compared to a 3.1% increase for new vehicles. “It stuck out like a sore thumb last year as well,” Fried said. In April of 2021, the used-vehicle category had a reported 22.7% price increase, he said.

The inflation happening since last year is much different from what Alaska experienced in other recent years.

Alaska actually had deflation in 2020, with prices falling by an average 1.1% that year, Fried said. It was Alaska’s first recorded year of deflation, he said.

And prior to 2020, “we were going through a period of very, very low inflation,” he said. The annual average was 1.5% for the decade leading up to 2020.

Alaska has had years of high inflation in the past, but that was a relatively long time ago, he noted. “You have to be pretty old to remember them,” he said.

Some of the best years for Alaska economic growth, it turns out, were also years with high inflation, Fried said. Alaska’s highest annual inflation rates occurred in the oil-boom years of the 1970s and early 1980s, a period when the Trans Alaska Pipeline System was being built and oil began flowing through it. The highest annual rate for Alaska was 13.7% in 1975. Inflation was a national problem then, but it seemed to have little effect on Alaska, Fried said. “It didn’t hamper Alaska’s strong growth,” he said.

Correction: This story has been updated to reflect that the data was released last week.