Iceland party chair demands action as inflation reaches 5.9%

The chair of Iceland’s Independence Party, Guðrún Hafsteinsdóttir, says the government must take responsibility for rising inflation and high interest rates, after annual inflation reached 5.9%, mbl.is reports.

“These are very bad news for households and businesses in the country,” Hafsteinsdóttir told mbl.is. “We cannot see an end to this period of high inflation and high interest rates, and therefore high living costs.”

Inflation over the past 12 months rose slightly from 5.6% the previous month. Hafsteinsdóttir said Prime Minister Kristrún Frostadóttir had repeatedly said in a parliamentary policy speech a few weeks ago that the government was fixing the country and that its actions would speak for themselves.

“We see neither,” Hafsteinsdóttir said. “The actions speak, but in the opposite direction. We see no results.” She said the government had been in office for two years and was not managing the task it had taken on. She added that Iceland needed effective economic management rather than to be “fixed.”

Hafsteinsdóttir also criticised the government for allowing a temporary reduction in fuel VAT to expire on 1 September, when the rate rose from 11% to 24%. She said her party had proposed extending the reduction into autumn, but the government rejected the amendment.

She accused the government of imposing substantial tax and fee increases and said it should stop focusing on the past and work towards the future it had promised. “It promised lower interest rates and lower inflation, and I cannot see any results from those promises,” she said.

During a constituency week visit to the South Constituency, Hafsteinsdóttir said she had heard concern from people in the tourism industry. Winter bookings did not look promising, she said, and there had been some cancellations. She also warned that Iceland was pricing itself out of the market and said people were worried about increased taxes on tourism.

She said people were also concerned about winter services, which the government says it is improving but which she believes are being reduced in some parts of the South Constituency.