Renters, pensioners, and families with children are the target groups of government measures intended to reduce the impact of inflation on the most vulnerable demographics. The government approved the measures at a cabinet meeting this morning. They include raising social security benefits, income-related child benefits, and housing benefits.
Housing benefits raised by 10%
Almost half of households on the rental market receive housing benefits, according to estimates from the Housing and Construction Authority. Around 70% of them have index-linked leases. Housing benefits will be increased by 10% from June 1, and the income limit for receiving housing benefits will be raised by 3%. The cost of rent has doubled in Iceland over the past decade.
Additional ISK 20,000 per child
Families receiving income-related child benefits will receive an additional ISK 20,000 per child [$153; €145], to be paid out by the end of June. The child benefit system is being reviewed “with the aim of addressing various shortcomings in the system,” in order to better achieve the objectives of reducing child poverty and supporting parents, especially in lower income brackets. From June 1, disability benefits and benefits for old-age pensioners will be increased by 3%.
Inflation continues to climb
Inflation measured 7.2% in Iceland last month. The Central Bank instituted a sharp 1% hike in interest rates in response. Íslandsbanki analysts have predicted that inflation will continue to rise in Iceland, peaking in June at 7.7%.
The notice concludes by stating that the government will “focus on tight fiscal policy to support the Centra Bank’s monetary policy.”