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Iceland experiences spike in inflation

Icelandic National Broadcasting Service, RÚV, reports that real estate prices increased 30% over construction prices this year. At the same time inflation in Iceland measured at one of the lowest levels in Europe using a pan-European metric.

In November, however, inflation clocked in at 4.2% using a domestic metric, the highest rate in Europe except for Latvia.

The domestic metric takes into account real estate price hikes but he pan-European one does not.

Analysts at KB Bank forecast a 20-40% increase in new building in the next 12 months in response to increased real estate prices.

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