Inflation Rate Drops to 9.3% Skip to content
inflation rate iceland
Photo: Governor of the Central Bank, Ágeir Jónsson.

Inflation Rate Drops to 9.3%

The latest numbers from Statistics Iceland indicate a moderate decrease in the rate of inflation, with the 12-month figure being calculated as 9.3% in September.

The data from Statistics Iceland below shows monthly and yearly fluctuations in the consumer price index, with July’s level of 9.9% representing a likely maximum.

In the data from Statistics Iceland, it is noted that the price of clothes and shoes have risen by some 4.6%, and household electronics by 5.4%. Airfares have been a notable exception, decreasing by 17.9%.

Given rising interest rates and the importance of the housing market in driving inflation, inflation rates are expected to slowly decrease for the remainder of 2022.

This trend is likely reinforced by the housing market, which has shown signs of slowing recently.

inflation rate iceland
Statistics Iceland / Hagstofa Íslands

A statement from the Central Bank today notes that inflation among Iceland’s trading partners has not been higher in decades and that these international trends may also have a negative impact on Iceland.

Read more: Signs Inflation May Have Peaked in Iceland

Nevertheless, the Central Bank stresses that “the resilience of the systemically important banks is high. Their capital and liquidity position is strong. The Central Bank of Iceland’s stress test for 2022 shows that the banks have the ability to respond to external shocks and at the same time support households and businesses.”

The statement continues: “Increased external uncertainty underlines the importance of maintaining the resilience of the Icelandic financial system. The situation in this country is better than in our trading partners, but full vigilance must be maintained in order to preserve financial stability.”

Up until now, the countercyclical capital buffer (CCyB), the amount of liquid capital a financial institution holds in case of stress, has remained unchanged. As of tomorrow, September 29, the CCyB will be increased by 2%, in the event that more credit needs to be provided to the economy in the event of a downturn.


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