ALASKA TRENDS

While vaccination rates in Alaska continue to soar, total prices consumers paid for goods and services in 2020 moved in the opposite direction.

The CPI, or Cost Price Index, measures the average change in prices paid by consumers for a market basket of goods and services over a period of time. According to Department of Labor Economist Neal Fried, it is the most applied cost-of-living statistic in the state that is used to adjust a variety of rates including collective bargaining agreements and minimum wage.

And as revealed in the Department of Labor’s March Economic Trends report, the CPI for urban Alaska experienced a 1.1 percent decline in 2020—the first time in the history of the state. The deflation was likely a pleasant symptom of an otherwise unpleasant year. And while it’s not expected to continue, we’ll take the small win.

US inflation rate compared to the Alaska inflation rate

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 USA AK 1.5 1.80 2.96 3.20 1.74 2.20 1.5 3.10 0.76 1.60 0.73 0.50 2.07 0.40 2.11 0.50 1.91 3.00 2.29 1.40 1.36 -1.10 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

$98.90=$100

For every $100 the urban consumer spent in 2019, they paid $98.90 in 2020. 2019 had a 1.4% inflation rate, the average consumer spent about $101.40 for every $100 they spent in 2018. It’s the mostapplied cost-of-living statistic in the state, used to adjust collective bargaining agreements, rental agreements, child support payments, the minimum wage, and real estate contracts.

.3%

Signs point to a different story for 2021. October and December recorded 0.3% inflation from the same periods the year before.

4.4%

Food and beverage prices rose 4.4%.

4 of 6

Demand fell hard for many goods and services last year, and Alaska’s CPI registered deflation from the prior year four out of the six (bimonthly) times it was measured.

Housing

Housing and transportation were responsible for most of last year’s drop in prices. Housing costs fell 1.9%, its “weight” alone pushed the index into negative territory.

Urban AK USA Clothing -6.10% -4.80% Education/communication 0.10% 1.80% Food & Beverages 4.40% 3.30% Housing -1.90% 2.20% Medical Care 5.20% 4.10% Other Goods & Services 2.40% 2.50% Recreation -1.50% 1.30% Transportation -6.80% -4.20%

Transportation Clothing Housing Recreation Education/Communication Other Food & Beverages

Care Medical

Travel

Lower energy prices seeped into other categories, contributing to the 6.8% drop in overall transportation costs. Air travel was another factor in that decline; demand tanked in 2020 and plane ticket prices plummeted in response.

Energy

Alaska’s energy costs fell a whopping 10.6% in 2020 because of the oil price collapse at the pandemic’s onset. While oil prices recovered somewhat as the year went on, they remained well below 2019’s levels.

Energy Prices Clothing

Clothing was near the top of the deflation list, with prices down about 6% over the year.

56%

The typical household spends more than 56% of its monthly budget on housing and transportation costs.