Union leader urges shared effort to bring inflation down

Vilhjálmur Birgisson, chairman of Starfsgreinasamband Íslands, a trade union federation, welcomed the Central Bank of Iceland’s decision to leave interest rates unchanged, mbl.is reported. He said a coordinated effort could help bring inflation down.

Inflation rose from 5.6% to 5.9% last month, Birgisson noted. He said a broad coalition in the labour market had taken an important step by signing an extension of collective agreements with the Confederation of Icelandic Enterprise, aiming to create conditions for lower inflation and interest rates.

“No one can avoid responsibility. Everyone must take part,” he said. Birgisson said the parties had the coming year to work together to lower inflation from 5.9% to 3.9%, a goal he considers realistic. He estimated this could bring a 90 billion benefit to Icelandic society, businesses, households, municipalities and the state through lower indexation.

Birgisson said the unchanged rate decision was expected, given rising inflation and unrest in the labour market. The coalition had wanted to send a message to the Central Bank, he said, adding that he had hoped its actions might have had a more positive effect, but time was short and the decision had already been made.

He said municipalities had announced plans to limit general fee increases to 2.5%, while the government had set the same limit for its fees, except for the kilometre charge. Large grocery retailers and other companies had also said they would help restrain prices, and the Confederation of Icelandic Enterprise would urge member companies to show restraint on fees and prices.