Icelanders Consume Less Skip to content

Icelanders Consume Less

By Iceland Review

Icelandic residents have for the past few months driven less, reduced the usage of debit cards and shopped increasingly at budget grocery stores. With the collapse of the ISK and increasing food prices, people are forced to review their consumption patterns.

Jóhannes Gunnarsson, chairman of the Consumers’ Association of Iceland (NS), told Morgunbladid that reduced consumption is the best strategy to fight the wage reduction that Icelandic households are suffering from.

Gunnarsson said salaries have not increased as much as food prices, the cost of services and down payments of loans. Therefore, Gunnarsson recommends an immediate legal amendment to introduce a payment adjustment scheme.

According to Gunnarsson, a bill supporting a payment adjustment scheme is being prepared at the Ministry of Commerce, but he finds it imperative that the bill be approved already this fall.

According to Morgunbladid, in August this year, 26 loaves of breads could be bought for ISK 10,000 (USD 106, EUR 74) while in August last year, 33 loaves could be bought for the same price. In August 2007, motorists could buy 84 liters of diesel oil for ISK 10,000, but only 55 liters for the same amount in August this year.

Those who have loans denominated in foreign currencies are looking at a vast increase in debt. The principal of an ISK 30 million (USD 318,000, EUR 221,000), 40-year loan that was taken in August 2007, has grown to ISK 44.3 million (USD 470,000, EUR 326,000) in only one year.

In that period of time the ISK has depreciated by 45.9 percent and consequently purchasing power has decreased by 5.4 percent. The Confederation of Labor (ASÍ) reported yesterday that the average increase in the price of basic foot items is five percent for the past three months.

Click here to read more about the economic situation in Iceland.

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