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Inflation Reaches its Peak

By Iceland Review

The rate of inflation has reached its peak, according to specialists of the analytical department of Kaupthing bank.

“The rate of inflation has probably reached its peak, even though we predict that 12 months inflation could increase,” Ásgeir Jónsson, head of Kaupthing’s analytical department told Morgunbladid.

The inflation rate in May was 1.4 percent which means that the 12-month inflation rate now stands at 12.3 percent. That is the highest inflation for 17 years.

Jónsson says that the impact of the devaluation of the Icelandic króna affected the economy sooner than anyone predicted, but products respond differently to rate changes.

The rate of the Icelandic króna has been recovering in recent weeks and that should decrease the effects of the devaluation, according to Jónsson.

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