FILE - Montana business

Yokie Johnson, center, walks with her husband, Lee, left, and their daughter, Rose, 15, into their restaurant, MontAsia, in Fishtail, Mont., Friday, June 17, 2022. The main road into Fishtail was washed away by the recent floodwaters and the Johnsons worry the lack of traffic will hurt their business. F

(The Center Square) – Inflation is partially offsetting Montana's "historic wage growth," Montana Chamber of Commerce President and CEO Todd O'Hair told The Center Square in an interview.

Last year, Montana added almost 13,000 jobs that paid over $50,000 annually, according to state employment data. That was 3,000 jobs over Gov. Greg Gianforte's goal, his office said.

“We got there by cutting red tape and other unnecessary burdens on job creators, attracting new cutting-edge businesses to bring good-paying jobs to Montana, and investing in our workforce to ensure Montana workers have the skills they need,” Gianforte said in a statement last month.

But inflation is eating into those wage gains, according to O'Hair. Prices in the Western U.S. have gone up 8.3% in the past 12 months, the Bureau of Labor Statistics' consumer price index shows.

"We're seeing significant inflation particularly in those areas that are most critical for day-to-day life," he said. "Meat prices are up. Milk prices are up. Egg prices are up. Fuel prices are up in a state like Montana where people have to travel longer distances, increased fuel prices are a really big erosion on wage growth."

There could be more pain on the horizon, according to O'Hair.

"One of our largest utilities just put in a rate increase request for electricity for almost 16%," he said. "That is due at least in part to inflation. Everything for them is costing more. We're similar to other states in that we are seeing some of the historic wage growth being consumed by just the cost of living which is also rising rapidly."

Labor shortages also remain a problem in Montana, even with the increased wages, the chamber president said.

"I went by a McDonald's the other day and the sign said the starting wage was up to $20 an hour," O'Hair said. "We still see businesses that can't get people, even though the wages are up."

Rising fuel prices also led some tourists to cancel reservations this summer in Montana, he added, a problem made worse by the floods at Yellowstone National Park. Overall energy prices in the West are up 28.5% over the last 12 months, according to the BLS.

While future economic trends are difficult to predict for the state, O'Hair is still optimistic.

"If things are relatively the same, I would say we will have a good year next year," he said. "But it's a new world, right? Everybody is trying to figure out what this means."