Parking in Reykjavík

Parking meter in Reykjavík

In Reykjavík, there are four parking zones: P1, P2, P3, and P4. You can see which zone you are in by the blue signs with a white “P” and its corresponding zone number. Each has its own prices and payment periods. You can see the parking zones in the city centre on this map, and their prices here below.

Street parking in Reykjavík: prices and chargeable hours

Zone P1 (Red and pink)

  • ISK 600 [$4.35, €4] per hour
  • 9 AM–9 PM on weekdays and 10 AM–9 PM on weekends 
  • Maximum 3 hours

Zone P2 (Blue)

  • ISK 220 [$1.60, €1.47] per hour
  • 9 AM–9 PM on weekdays and 10 AM–9 PM on weekends 

Zone P3 (Green)

  • ISK 220 [$1.60, €1.47] per hour for the first two hours 
  • ISK 65 for each additional hour
  • 9 AM to 6 PM on weekdays

Zone P4 (Orange)

  • ISK 220 [$1.60, €1.47] per hour
  • 8 AM to 4 PM on weekdays

Street parking is free of charge on the following holidays:

New Year’s Day, Holy Thursday, Good Friday, Easter, Easter Monday, First Day of Summer, May 1, Ascension Day, Whitsunday, Whitmonday, June 17, Merchants Day, Christmas Day and December 26.

Reykjavík Hallgrímskirkja church
Photo: Skólavörðustígur Street in Reykjavík City.

Parking garages in Reykjavík: prices and hours

Parking garages are open daily from 7 AM to midnight.

Garages at Stjörnuport (Laugavegur St. 86-90) and Vitatorg (Skúlagata St. 22)

  • ISK 180 [$1.30, €1.20] for the first hour
  • ISK 120 [$0.87, €0.80] each additional hour 

Garages at Kolaport (Kalofnsvegur Rd. 3), Ráðhús City Hall, Traðarkot (Hverfisgata St. 20) and Vesturgata St. 7

  • ISK 260 [$1.90, €1.75] for the first hour
  • ISK 130 [$0.94, €0.87] for each additional hour

If you leave your car past opening hours, you will continue paying the hourly fee, even though the garage is closed for access.

Paying for parking in Reykjavík

You may use coins, debit/credit cards, or digital wallets to pay through parking meters. You can also pay online on the Reykjavík Parking Authority’s website. Lastly, you can pay with a parking app on your phone. Note that some meters may not accept coins.

  • Tickets bought in Zone P1 are valid for all zones. 
  • Tickets bought in Zone P2 are valid in zones P2, P3, and P4
  • Tickets bought in Zone P3 are only valid in Zone P3
  • Tickets bought in Zone P4 are only valid in Zone P4

Paying with a parking app

You can pay using parking apps such as EasyPark and Parka. These apps can be used for any parking zone or garage in Reykjavík. You simply input your licence plate number and the zone in which you are located to activate the timer, and then check out once you are done using the space. The fee is prorated and paid through the app. The apps include a map of the zones, making finding the less expensive ones easier.

Parka map Reykjavík
Photo: In parking apps, you can see which parking zone you’re located in.

I got a parking fine in Iceland; what do I do?

Parking tickets in Iceland are electronic, meaning you will not find a paper ticket on your windshield. The car’s licence plate will be traced to your car rental company, which will notify you and provide payment instructions. If you receive a parking ticket, you can pay it here. Familiarising yourself with Icelandic parking signs can help you avoid getting a fine. Keep in mind that street parking and garages are not meant for campers or motorhomes; those must be parked at campsites. Remember that in Iceland, you must park in the direction of traffic.


Easter Egg Price Wars Result in Modest Discounts

A broken Icelandic easter egg and the candy inside it.

The price of Easter eggs has gone down in the last couple of weeks as stores compete with pricing strategies. The cheapest chocolate treats can be found in Bónus, Extra and Krónan, while the most expensive eggs are in 10-11, Iceland and Krambúðin, Vísir reports.

In Iceland, Easter eggs are topped with a figurine, most often a yellow chick, and filled with candy along with a piece of paper with a proverb written on it. They are a ubiquitous part of Easter festivities among Icelandic families.

Big difference between stores

The Icelandic Confederation of Labour (ASI) has reviewed the prices of Easter eggs and found that the lowest prices have gone done by a few percentage points. On March 8, Heimkaup lowered their prices, with Extra, Bónus and Króna following suit.

The three stores where prices remain unusually high are 10-11, where the Easter eggs cost on average a whopping 40% more than the lowest prices, and Iceland and Krambúðin with a 38% and 37% deviation respectively. The biggest difference was on the price of a small “lava egg” from candy company Góa, which cost ISK 140 [$1, €0.90] in Krónan, but ISK 249 [$1.81, €1.70] in 10-11.

Bónus leads the way

Bónus consistently had the lowest prices, according to ASI’s review. Of the 34 Easter eggs under review in Bónus, the store sold 28 of them at the lowest price. Extra sold 34 of their 48 eggs at the lowest price, while Heimkaup sold 32 of the 46 eggs reviewed at the lowest price.

Survey Finds Iceland Priciest for Shoppers

Nettó Hagkaup Bónus Iceland Fjarðarkaup

According to a recent price survey by the Confederation of Icelandic Labour (ASÍ), Iceland is the most expensive supermarket chain in the country. Fjarðarkaup increased prices the least between years, although it is still the cheapest to shop in Bónus.

19% year-on-year increase

According to a recent survey conducted by the Confederation of Icelandic Labour (ASÍ), Iceland ranks as the most expensive supermarket chain in the country. The study, which included eight different supermarkets, was a follow-up to a similar survey carried out in October of the previous year. It showed that Iceland had the highest prices overall and also saw the most significant year-over-year price increase, at over 19%.

Among the surveyed supermarkets, Bónus had the lowest price levels, consistently offering the least expensive products. Fjarðarkaup, meanwhile, registered the smallest annual price increase, averaging about 6.5%.

Heimkaup, which held the distinction of being the most expensive supermarket last year, limited its annual price increase to 8%, moving it to fourth place in the current ranking. Hagkaup and Kjörbúðin are now the second and third most expensive supermarkets, respectively. Following Bónus in affordability are Króna and Nettó, with Fjarðarkaup trailing closely behind as the fourth least expensive option.

Farmers Benefit from a Record Increase in Wool Prices

icelandic sheep

The board of Ístex has decided to raise the price at which it purchases wool from farmers by an average of over 48% for all processing categories. This is the biggest increase in wool prices in the last 15 years, Bændablaðið reports.

80% Farmer-Owned

Ístex was founded in 1991 to “carry on the Icelandic wool industry that started in Mosfellsbær in 1896,” as noted on the company’s website. Ístex buys directly from farmers and processes about 99% of all Icelandic wool. Icelandic farmers own 80% of the company.

Yesterday, the board of Ístex announced that it had decided to raise the price at which it buys wool from farmers by an average of over 48% for all processing categories. Bændablaðið interviewed Ístex CEO Sigurður Sævar Gunnarsson, who stated that the increase varied between categories of wool, with a greater increase in more highly-rated classes. This is the biggest increase in wool prices in the last 15 years.

“One of the reasons for these price increases is the good performance of Ístex in the first months of the year and, indeed, in the last quarters. We had a very difficult 18 months starting in the summer of 2019 with a relatively rapid decline in the sale of wool blankets, in addition to low wool prices, generally.”

Sigurður explained that the operational wheels “started to turn again” when Ístex added an evening shift to its knitting-yarn production in Mosfellsbær in the fall of 2021. Greater efficiency was achieved in terms of the equipment and sizes, together with the fact that prices rose. “So, the last two years have been quite busy for our people but, at the same time, rather rewarding,” Sigurður remarked.

As noted in the article, sales in the first six months of the year are approximately ISK 200 million ($1.5 million / €1.3 million) higher compared to the same period last year.

“Better prices than expected have been achieved for certain categories of wool … the prospects this year, therefore, look good, but on the other hand, we may be just one more serious malfunction from a difficult year,” the article quotes Sigurður as saying, who added that the favourable exchange in Iceland is contrary to the situation abroad, “where prices for raw wool are still low and have not fully recovered.”

Accommodating farmers

Other factors also affected the board’s decision to raise prices for farmers, according to Sigurður. “It felt right to accommodate farmers due to delays in the collection of wool in many parts of the country.”

“We’ve suffered serious malfunctions in our machinery, which delayed our washing process by more than a month. This meant that we were unable to receive more wool during the repairs. All equipment is now in order, and we are working hard to get all the wool to Blönduós as soon as possible. We at Ístex would like to thank farmers for their patience and apologise for the inconvenience caused during this difficult period.”

Sigurður observed that the proper categorisation of wool by farmers was key to increasing the value of wool. Over the years, most farmers had taken great pride in improving the quality of their wool, and those who had taken such steps were being better supported, compared, perhaps, to those who could stand to do even better.

Sigurður concluded by stating that Ístex’s biggest investment this year was a new spinning machine that was slated to arrive in the fall. “It’s being built in Italy and will suit the Icelandic wool very well.”

Why are the prices so high in Iceland?

Why is Iceland so expensive?

Iceland is relatively expensive compared to many other countries but on the other hand, the average salary is higher than in most other countries. There are several reasons for Iceland’s high prices, including a small market, oligopoly, high reliance on imports, geographical isolation and high import taxes and tolls. Not everything is expensive in Iceland, however, the most notable exception is energy, including electricity, water and geothermal power, which is relatively cheap. That is an advantage for Iceland during the current global energy crisis.

Iceland’s geography means that most goods are imported and products need to be transported on container ships or by air. The small market only has a handful of companies handling imports to Iceland. Two companies take care of most shipping and the air cargo transport industry also has limited competition. The climate doesn’t help, as harsh weather conditions in winter can negatively impact transportation. 

Oligopoly is a wide-ranging issue across sectors. Most Icelandic grocery stores are run by one of two companies, Hagar and Festi with a single location of American Costco as their main competitor. The same two companies own most gas stations and Costco runs one station, which also happens to be the cheapest alternative for car owners. And the list goes on.

Taxes in Iceland are high, including import taxes, and again, it’s due to Iceland’s small market and population. However, the state maintains a strong infrastructure, e.g. a wide-ranging welfare system and an extensive road network. When fewer people shoulder those costs, it means higher taxes per person. The state also levies heavy tolls on imports in order to maintain local production, for environmental, social, and safety reasons. Local production, e.g. food production, does not have the same economies of scale as producers in other countries and therefore cannot keep the prices down to the same level. In order to support local production, protective tariffs are used on imports. These reasons seemed validated e.g. during the Covid pandemic when global supply lines were disrupted.

Iceland’s small population leads to a small market making it less attractive to global companies. A good example is from the global financial crisis in 2008 when the exchange rate of the local currency ISK plummeted. McDonald’s no longer considered Iceland a feasible market to operate in, so they shut down all McDonald’s locations in the country. A side note: Some Icelanders were happy to see the American burger chain leave the country while others missed it immediately, some to the extent that the first thing they do when visiting other countries is to grab a McDonald’s burger. In a similar vein, some Icelanders have regularly complained about the lack of Starbucks, but the café chain has never seen a reason to open a branch in Iceland due to the small size of the market. 

When Costco opened a store in Iceland in 2017, there was great excitement in the air, as Icelanders were only used to local grocery stores like Bónus and Krónan, where the variety is limited compared with other countries and prices are also significantly higher. The hype was so great that a large part of the population joined a Facebook group for sharing photos and prices of products bought in Costco. When this is written, roughly 25% of Iceland’s population are members of the group (97,482 members while the population of Iceland was 387,800 at the end of 2022).

Tourism has raised prices in certain categories, most notably the housing market where the explosion of Airbnb rental availability has limited the supply of housing available for locals to rent and pushed up prices. During the pandemic when tourism dried up in Iceland temporarily, the prices of rental housing unexpectedly went down after several years of steep increases, ever since the tourism boom around 2010. The government has taken initiatives to mitigate the Airbnb effect by setting a maximum of 90 days for short-term rental per year on the same tax level as other housing rentals. If people want to rent their apartments for more than 90 days each year, they’re taxed as if they were a business in the hospitality industry.

Through the years, Iceland has had numerous vicious circles of relatively steep salary increases followed by price increases, inflation and increased interest rates. At the time of writing, we are going up with the rollercoaster, as ongoing labour talks have proven tricky to resolve. Some workers are striking in an effort to get higher wages and the Central Bank just increased the interest rates for the 11th time in less than two years to combat inflation, which will in turn increase interest rates on people’s mortgages and increase the pressure on higher salaries. 

The other side of the coin is that Iceland offers higher salaries and a relatively high purchasing power despite the high cost of living. In times of crises and rapid inflation, locals tend to do what they can to minimise such effects by reverting back to traditions from a time when tough times necessitated a more frugal way of life. For example, when the financial crisis hit in 2008, people started to buy and even make their own slátur (an Icelandic speciality from the innards of sheep, similar to the Scottish haggis). The innards of sheep also increased in popularity as the main ingredients for dinner, e.g. hearts, liver and kidneys. In times of crises, people also tend to buy more wool and the popularity of knitting goes up. Not only are woollen hats, mittens, and sweaters great for keeping out the winter cold, but the knitting itself is a pleasant, relaxing activity. Recipes for a classic fish stew (plokkfiskur) start to appear more frequently, and baking and bringing lunch packs to work or school become commonplace.

For tourists in Iceland, there are various ways to save while enjoying a great trip. For breakfast, you could get ingredients from the low-cost grocery stores such as Bónus (the cheapest supermarket in Iceland) and Krónan instead of more expensive convenience stores , e.g. oats, raisins, skyr, bread, butter, cheese, vegetables, coffee and juice. If you are taking a road trip, you can save time (and have more time to explore the country) by packing lunch to have on the way instead of eating in restaurants. When you want to eat out, these are among the more economical options in Reykjavík:

  • Mandi offers Syrian food like shawarma and falafel and is probably the most popular lunch place in Reykjavík (it has a branch downtown and in Skeifan)
  • The Noodle Station in Reykjavík is also widely popular and offers noodle soup available in three variations: chicken, beef and vegetable, along with a mix of secret ingredients
  • Café Loki downtown Reykjavík offers a nutritious and filling Icelandic lamb meat soup and fish stew with rye bread 
  • Ramen Momo produces organic fresh noodles. Most of the ingredients in their dishes are locally made
  • 101 Reykjavík Street Food specializes in local food as well as international favourites, e.g. fish & chips, Icelandic fish stew and lamb soup (kjötsúpa)

In short

To sum up the points above, these are the main reasons for high prices in Iceland:

  • Geographic isolation
  • Oligopoly with very few companies dominating various sectors
  • High taxes and import tolls
  • Small population, hence a small market
  • Many global companies don’t see the market as feasible (e.g. McDonalds, Burger King and Starbucks)
  • Tourism has increased demand in some sectors and thereby the prices, most notably in housing, with Airbnb rentals 

Despite high consumer prices, salaries are also high, which makes for a relatively high purchasing power in international comparison. Then there are various ways for people to save, including buying food in supermarkets rather than restaurants.

See also our ASK IR on the cost of living in Iceland.

Cost of Dairy to Increase in New Year

According to a recent statement by the Ministry of Food, Agriculture, and Fisheries, the average cost of dairy products throughout Iceland is set to increase in the coming year.

As of January 2023, the wholesale price of dairy and dairy products in Iceland will increase by 3.5%.

The cost increase, which sets the price at which milk is bought from dairy farmers, is in response to increases in production costs since the price was last assessed in September of this year.

According to the Ministry, processing and distribution costs have risen by 5.06% in the last year, in addition to a 2.38% increase in livestock fees. Collective agreements have also caused recent increases to the cost of labour, in addition to the generally high inflation currently affecting the Icelandic economy.

Number of Apartments Sold in Capital Area Hits Two-Year Low

331 apartments were sold in the capital area in October, a 22% decline compared to the previous month. The number of apartments sold in the capital area has hit a two-year low, Fréttablaðið reports.

Rising interest rates and economic uncertainty

This week, the Central Bank announced that it was raising key interest rates by an additional 0.25%. Short-term interest rates (seven-day term deposits) would thereby reach 6%. The increase, which serve to complicate wage negotiations, came in response to a month-on-month rise in inflation, which rose from 9.3% in September to 9.4% in October.

In an interview with Fréttablaðið, Ýmir Örn Finnbogason, an analyst at Deloitte, explained that rising interest rates had led to a cooling real-estate market; an update to Deloitte’s real-estate dashboard, based on statistics from Registers Iceland, showed a 22% decline in the sale of apartments in the capital area in October when compared to September.

As noted by Deloitte’s report, even though sales have declined, prices have remained almost unchanged between the months: the average price of a square metre for an apartment was ISK 709,000 ($5,000 / €4,800) October, ISK 2,000 ($14 / in €14) higher than in September.

“Rising interest rates and economic uncertainty have an obvious effect,” Ýmir Örn told Fréttablaðið. Ýmir expects the real-estate market to continue cooling over the coming months, in light of growing tensions in the economy and wage negotiations.

As noted by Deloitte, single-family homes and apartments have followed the same trend, with fewer properties being sold in both categories: the number of single-family homes sold in October compared to September declined by 16%. The average price of a square metre also declined from ISK 647,000 ($4,600 / €4,400) to ISK 624,000 ($4,400 / €4,300).

“Real-estate prices reflect consumers’ investment power, which is primarily affected by the cost of borrowing money, i.e. interest rates. And rising interest rates obviously lead to a cooling market,” Ýmir Örn stated.

As noted by Fréttablaðið, the price of apartments and multi-family homes have risen in North and East Iceland but fallen in South and West Iceland.

Sharp Rise In Demand and Price of Hotel Accomodation

Icelandair Marina Hotel

The Statistics Office of Iceland reports that overnight stays in Icelandic hotels have nearly tripled since the same time in the previous year.

The primary driver of this increased demand came from the tourism industry, with tourists making up some 79% of overnight stays. The largest increase has been recorded in the capital region.

Increased prices have accompanied the increased demand for accommodation. In a recent article in Fréttablaðið, Icelandic traveller Þorsteinn Gunnarsson stated that just a three-night stay in Akureyri would have cost him some ISK 263,000 ($1,974 / €1,888). Þorsteinn claims that these prices raise questions of ethics and greed, and he regrets that Icelanders cannot tour their own country, choosing instead to vacation in Tenerife, for example.

Snorri Pétur Eggertson, managing director of Kea Hotel’s sales and marketing division, did not dispute Þorsteinn’s claims but attributed the rise in price to the global pandemic, supply chain shocks, inflation, and increased numbers in tourism.

According to the Statistics Office, there were already 558,000 overnight stays in Iceland in May, with more projected for the coming summer months.

Stocks Tumble, Gasoline Soars

icelandair757

Iceland has not been immune to the economic effects of the Russian invasion of Ukraine. Gasoline prices rose to ISK 303 ($2.27; €2.06) per litre around the country this morning, while diesel prices also surpassed ISK 300 per litre. Nasdaq Iceland’s index has dropped 12% since the invasion began, with the value of Icelandair stocks dropping by 32%. This drop has entirely erased the stock exchange’s steady gains over the past year.

Nasdaq Iceland’s selected share index hit a low in March 2020 at the beginning of the COVID-19 pandemic. It rose gradually from that date, until reaching a high point last September, RÚV reports. The day the Russian invasion began, the selected share index dropped by 6%. The stock index remains significantly higher than it was in March 2020, but its gains over the past year have been fully erased.

Íslandsbánki’s Chief Economist Jón Bjarki Bentsson outlined the three main factors causing stock prices to fall in Iceland. Firstly, the uncertainty created by the Russian invasion of Ukraine has pushed investors to opt for less volatile assets. Secondly, rising energy and raw material prices impact the operations of companies that depend on those resources. Thirdly, the uncertain economic outlook on a global level may impact how well Iceland’s tourism industry bounces back from the pandemic and how many people travel to Iceland in the near future. This last factor impacts companies such as Icelandair significantly.

Rúnólfur Ólafsson, CEO of the Icelandic Automobile Association, has pointed out that rising gas prices impact often impact those who are the most disadvantaged, as well as impacting the cost of transporting goods and the cost of snow removal for municipalities. He called on the government to temporarily lower taxes on gasoline in order to mitigate the impact.

Prices Expected to Keep Rising in Iceland

Finances in Iceland

Commodity prices on world markets are at an all-time high and Iceland has not escaped the effects of that development, RÚV reports. Price increases are not expected to slow in Iceland in the coming months, according to Andrés Magnússon, CEO of the Icelandic Federation of Trade and Services (Icelandic: SÞV). Andrés says the Central Bank of Iceland has no tools at its disposal to combat rising prices.

“We have not seen such increases during peacetime, those are the facts. All indexes, all commodity indices confirm it. No one would think that companies, whether large or small, in whatever form, could take this on [alone],” Andrés stated. “When there is such a large increase in the purchase price, it affects pricing, that’s nothing new.” He says the timing is particularly unfortunate in Iceland, as collective agreement negotiations are approaching.

“The government must be concerned about this. We must draw attention to the fact that the government has already come to the aid of farmers, because fertiliser prices are doubling, apparently, and has given farmers a grant of ISK 700 million [$5.4 million, €4.9 million]. It will be interesting to see whether the government intends to come to the aid of the entire public, which will inevitably be affected by this.”

Housing market impacts inflation

Andrés says the Central Bank of Iceland has no tools to tackle so-called “imported inflation,” when the price of imports increases. “This is a situation we have no control over here [in Iceland] and the Central Bank has no tools or equipment in its arsenal to respond. So in that sense it’s entirely new, dealing with what we call imported inflation.”

Social-Democratic Alliance MP Kristrún Frostadóttir stated that rising prices on the housing market played a big part in driving up inflation. “The largest part of the inflation that is above the inflation target is due to rising housing prices in these incredible times,” Krístrún stated, adding that the government could do more to address the issue. “A 17% increase in housing prices in one year is not normal and we are seeing this spread to other areas now. Now there is talk that domestic inflation is starting to pick up, why do you think that is? It’s because housing is the largest single item in individual accounting.”