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Another year of low inflation in Anchorage has downside for low-paid workers

  • Author: Annie Zak
  • Updated: July 9, 2018
  • Published July 9, 2018

Downtown Anchorage, Alaska on June 12, 2018. (Loren Holmes / ADN)

In Alaska's largest city, the inflation rate — which affects food prices, housing, wages and more — was near a record low for the third year in a row in 2017.

The rate was 0.5 percent last year in Anchorage, according to a new economic trends report from the Alaska Department of Labor and Workforce Development. That's compared to 2.1 percent nationally last year.

The lowest recorded inflation rate for Anchorage was in 1963, at 0.3 percent.

"No other economic indicator has more daily ramifications for people than inflation," the report said. "It's tied to bargaining agreements, wage negotiations, child support payments, real estate agreements, and — as of 2017 — minimum wage adjustments."

In 2017, Alaska's minimum wage went up by a nickel and this year's increase was even smaller, at 4 cents.

The report, which looked at the cost of living around Alaska, found that Anchorage households spent about 40 percent of their income on housing in December of last year. About 20 percent went to transportation, and the next highest spending category was food and drink.

Though inflation is higher nationally, it's still at a low level, said state economist Neal Fried, who authored the report. Housing inflation in 2017 was 2.9 percent in the U.S. compared to 0.3 percent in Anchorage, due to a strong economy in the Lower 48 and a recession in Alaska.

"Lower inflation, that's generally the environment you want to be in from a broad economic standpoint," Fried said. "But when you look at the reasons — obviously if our economy wasn't as slow as it is, our inflation rates would probably be closer to the national average."

The cost of living in Alaska was the seventh-highest in the country in early 2018, the report said, citing an index from a group called the Council for Community and Economic Research. Coming in ahead of Alaska were the District of Columbia, New York, California, Hawaii, Maryland and Massachusetts.

Alaska has long been a pricey place to live, but other places are gaining on the Last Frontier, the report said. Seattle is one example of that shift. In 2010, the cost of living in Anchorage was slightly higher than Seattle, the report shows, but by 2015 that was no longer the case.

"We used to be such an aberration in the '70s and the '60s," said state economist Neal Fried, who wrote the report. "We were famous for being an expensive place. … And that's not as true as it used to be.

"It's not because our costs have come down relevant to the rest of the nation, although some of that has happened," he said. "But a growing number of places are now becoming much more expensive and catching up with us or going past us."

Juneau had the highest average home price in the state last year, followed by Anchorage. The cost of rent, plus utilities, was highest in Kodiak.

To measure the cost of living in Alaska, the labor department's report uses a consumer price index that focuses on Anchorage and is treated as the "de facto statewide measure" for inflation.

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