Inflation reaches two-year high at 5.6 percent

Inflation in Iceland rose to 5.6 percent over the past 12 months, its highest level in two years, according to mbl.is, citing Statistics Iceland. The rate was 5.3 percent the previous month.

Both Íslandsbanki and Landsbankinn had forecast an increase in inflation in August. Íslandsbanki forecast a rate of 5.6 percent, while Landsbankinn predicted 5.5 percent.

Statistics Iceland said clothing prices rose by 4.1 percent as seasonal sales were reversed in many places, contributing 0.10 percentage points to the consumer price index. Imputed rent increased by 0.9 percent, adding 0.18 percentage points, while international airfares fell by 9.6 percent, reducing the index by 0.34 percentage points.

University fees rose by 15.1 percent, contributing 0.07 percentage points to the index. The increase was largely due to the registration fee at public universities rising from 75,000 Icelandic krónur to 100,000 krónur. The fee had last increased 12 years ago.

Over the past 12 months, the consumer price index rose by 5.6 percent, while the index excluding housing increased by 5.2 percent.