Fuel prices shot up 30% nationwide last year. Paper-cup costs are crescendoing. Local grocers are left guessing when products, from bread one week to cheese the next, will be back in stock.
Historic inflation and supply chain problems have persisted for months across the country and in Haines, and there doesn’t seem to be a clear end in sight.
“I think Haines has been hit just like the rest of the United States,” said Mountain Market owner Mary Jean Sebens, adding that the cost of a case of paper cups recently tripled.
“We haven’t been able to order cups for weeks. Pretty soon people might just need to bring their own cups,” Sebens said half-jokingly.
Wheat rolls also have been out of stock from suppliers recently. “We just can’t get them,” Sebens said. “You can’t have the bowl and roll without the roll.”
Sebens so far has taken a wait-and-see approach to pricing Mountain Market’s cafe items. She said she has hoped that the “wild swings” in pricing and product availability would settle before she has to offload some of the burden of cost hikes onto customers.
She said she doesn’t think the uncertainty will change anytime soon. “We’ve just been biting the bullet on it, but it’s getting a lot worse,” Sebens said.
In urban Alaska, the consumer price index increased by 4.9% last year, according to state data (which doesn’t include rural communities).
Economists say the current wave of inflation—which at 7% by the end of 2021 was the worst in 39 years—has been caused by high demand, surplus consumer spending and unique pandemic-related kinks, like virus outbreaks leading to staff shortages and disruptions in production and transportation.
There is debate among economists and politicians about the extent to which federal stimulus bills have contributed to inflation. An analysis by the Federal Reserve Bank of San Francisco said that President Biden’s $1.9 trillion American Rescue Plan, passed last spring, would cause short-term inflation — of 0.3 percent per year through 2022. Other economists say the stimulus bills drove consumer spending during a period of low supply, triggering a rise in prices.
Economists are also split on what to expect in the year ahead. “Some economic observers at the national level expect inflation to slow this year as energy prices play a smaller role in the year’s numbers — the price of oil isn’t likely to rise much further — and supply chain issues work themselves out. However, others expect the opposite, that supply chain problems will persist and we’ll enter a long period of higher inflation,” Alaska Department of Labor economist Neal Fried wrote in the state’s February trends report.
Haines Chamber of Commerce director Tracey Harmon said she’s concerned about the effect that rising costs could have on the local customer base. “I think businesses will have to place significant price increases on the consumer, and this is worrisome because people may be less inclined to shop locally if they think they can get a better deal out of town,” Harmon said.
Tyler Swinton, manager at Ole-rud’s Market Center, said the trend is that prices on just about every product are going up. He said that since the pandemic started there has been more uncertainty about the availability of products across the board, but that freak events, like flooding in Seattle, have also caused delays in production and shipping.
In addition to inflation on items from suppliers, Swinton said freight costs affect pricing at the store. “It’s getting tougher and tougher to not pass down some of those price increases to the customer,” Swinton said.
To cover rising fuel costs, Alaska Marine Lines recently upped its fuel surcharge to 15%, after raising it to 12.5% in the fall, up from 6.5% earlier in the year (which was below pre-pandemic levels). “It’s directly related to fuel prices, so as fuel prices have increased over the past year, the surcharge had to raise as well,” Dan Kelly, vice president of freight operations for Alaska Marine Lines, said in an email to the CVN.
In other economic news, the borough’s unemployment was at 10.5 percent in December—the lowest it has been in December, although not by much, since the Alaska Department of Labor began publishing data in 1990.
Still, unemployment last summer was about twice pre-pandemic levels, during months when the local labor force usually swells. The state still has a long road of recovery ahead: Alaska gained 7,100 jobs in 2021 after losing 27,600 in 2020, according to the state’s January trends report.
If cruise ships and tourists return to Haines this year, as early booking numbers indicate will happen, the summer job market could bounce back. “With an active summer season on the horizon, we forecast a stronger recovery this year at 22.2 percent (400 jobs), but a tight labor market and higher fuel costs are downsides,” state economist Sara Teel wrote in the January trends report.
In addition to the tight labor market and high fuel costs, there is still uncertainty regarding COVID-19 and a federal waiver for foreign-flagged cruise ships to bypass Canada and its ban on cruising. That provision, which is in the Alaska Tourism Restoration Act, is set to expire at the end of the month.
Harmon said the Chamber has been advocating to the Alaska delegation to extend the legislation, “but this is a very challenging and uncertain environment for businesses to operate in right now.”
Sebens said short staffing has required Mountain Market to close its kitchen two days a week – something the store hasn’t had to do in 30 years. Looking ahead to the summer, and the usually busy weekend of Beerfest, at the end of May, Sebens said, “It’s going to be really interesting navigating that event if we don’t have enough staff.”
The tourism advisory board, at a meeting last month, identified as a priority ensuring that the borough has a large enough workforce to help businesses with the expected return of cruise passengers and summer tourism this year.