The inflation rate in urban Alaska went up 3% in 2018, a departure after three years of barely any change, according to a new report from the state.
Price increases for medical care and energy largely drove the change, the Alaska Department of Labor and Workforce Development said in an economic trends report this week. The 3% bump marked the highest inflation rate in five years for urban parts of the state. Last year was also the first time in three years that costs in Alaska increased faster than the national level, the report said.
The uptick marks something of a return to more typical levels of inflation, said Dan Robinson, chief of research and analysis with the labor department.
From 2015 through 2017, Alaska inflation was 0.5% or lower, marking the lowest inflation period in the state’s history. That was largely because of the weak housing market tied to the state’s recession, the report said.
The inflation index is meant to represent consumer prices in Anchorage, the Matanuska-Susitna Borough, Fairbanks North Star Borough, Ketchikan Gateway Bureau, and Juneau. That’s why the labor department uses the term “urban Alaska.”
Housing is what people spend most of their money on in urban Alaska — it typically takes up about 40% of household income, according to the state. Transportation follows, and then food and drink. Health care costs, though accounting for a much smaller amount of household spending, have rocketed the most in recent years.
From 2010 to 2018, Alaska’s overall inflation increased 15.6%, according to the labor department, and health care costs rose 38% during that time.
“No other (category) has come close" to health care’s cost increases, the report said, “and price increases have been larger for Alaska than the U.S. in most years.”
Data for the first part of 2019 shows costs in Anchorage, Fairbanks, and Juneau are still “well above the national average.” But more and more, the cost of living in Lower 48 cities is eclipsing the cost of living here, the labor department said.
“Although Alaska cities have higher-than-average costs, they aren’t among the most expensive overall anymore,” the report said, “and the list of cities whose costs have overtaken Alaska’s continues to grow.”