VR chair says no one took responsibility as inflation hits two-year high

Halla Gunnarsdóttir, chair of VR, says the rise in inflation was foreseeable and could have been prevented, mbl.is reports. Twelve-month inflation is now 5.6%, up slightly from 5.3% last month and at its highest level in two years.

“What annual inflation shows us is that no one took responsibility for this situation, neither the public authorities nor companies. Everyone simply raised prices as they saw fit, without considering the impact this could have on the economic environment and society in general,” Halla told mbl.is.

She said price and tariff increases could have been avoided, while housing issues should have been addressed because they remain the biggest driver of inflation.

Halla said the 4.7% condition clause in the collective agreements had been “very broad” in VR’s view. The fact that inflation is nearly one percentage point above that level is, she said, “a complete condemnation” of the agreements’ underlying ideology.

She said future decisions must be based on data and reality rather than ideology. Iceland must also move away from what she described as the Central Bank’s established view that wage increases are the main drivers of inflation.