Inflation Rate in Iceland Decreases to Two-Year Low Skip to content

Inflation Rate in Iceland Decreases to Two-Year Low

By Ragnar Tómas

money

Inflation in Iceland slightly decreased to 6.6%, the lowest rate since February 2022, although it is still significantly higher than the target set by the Central Bank. The decrease fell short of analysts’ expectations, with the winding down of winter sales impacting prices of clothing, shoes, and furniture.

Four percentage points over the target

Inflation slightly decreased month-over-month and is currently being measured at 6.6%, RÚV reports. This marks the lowest inflation rate recorded in Iceland since February 2022 despite remaining over four percentage points above the Central Bank’s inflation target.

As noted by RÚV, the current measurement represents the third consecutive decrease in inflation, although the reduction was less than what bank analysis departments had predicted; Íslandsbanki and Landsbankinn had forecasted inflation to be at 6.1%, half a percentage point lower than the actual level of inflation.

Winter sales coming to an end have contributed to inflationary pressures. Prices for clothing and shoes increased by 8.4%, and furniture prices by 5.5%. Excluding housing prices, inflation would stand at 4.7%.

According to the harmonised index of consumer prices for the European Economic Area published by Statistics Iceland on Monday, inflation has risen by 5.6% over one year domestically, with only Serbia, Romania, and Turkey – where inflations stand at 64.9% – recording higher rates.

The average inflation rate across the EEA is 3.1%, with the lowest rates observed in Denmark and Italy at 0.9%.

Inflation refers to the rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling.

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