The twelve month inflation is now 4.2% and rising. This is the highest level of inflation for 10 months. Wages rose by 4.25% on June 1. Vísbending, a weekly magazine on business and economics, says that unless the Icelandic krona gets stronger, 12 month inflation may well be over 6% at the end of the year.
Statistics Iceland says the Consumer Price Index (CPI) based on prices in June is 379.5 points (May 1988=”100),” 0.50% higher than in the previous month. The CPI less housing cost is 360.7 points, 0.53% higher than in May.
Prices of food and non-alcoholic beverages rose by 1.2% (effect on the index 0.17%), mainly owing to 6.9% increase in prices of meat and meat products (0.18%). Cost of owner occupied housing increased by 0.7% (0.08%), thereof the effect of higher market prices was 0.10% and the effect of lower real interest rates -0.02%.
The CPI is 4.2% higher in June 2011 than in June 2010 and the CPI less housing cost is also 4.2% higher than one year ago. Over the last three months, the CPI has increased by 2.2%, equivalent to an annual inflation rate of 9.2% (7.9% inflation for the CPI less housing cost).