Domestic food prices keep grocery inflation elevated
Tuesday 10th November 2026 on 21:15 in
Iceland
Food and non-alcoholic drink prices rose 0.4% in October and were 3.9% higher than a year earlier, despite supermarkets freezing or cutting prices on many products this autumn, mbl.is reports, citing an analysis by Íslandsbanki.
The analysis says the consumer price index reflects the spending share of each product, not changes in what households choose to buy. Food and non-alcoholic drinks account for 15.3% of the index, with meat, dairy and grain products carrying the greatest weight. Price freezes do not lower the index, and shoppers’ savings from switching to cheaper brands or buying products on offer are not reflected until the annual update to the index weights.
Statistics Iceland’s figures show fish prices rose 13.7% over the past 12 months. Fruit prices increased 5.8%, meat 5.0% and dairy products 4.7%. In the past two months, meat prices rose 1.5% and dairy prices 1.2%, while grain and some other products were unchanged or became cheaper.
The Association of Icelandic Consumers’ grocery price index rose by just over 0.4% from September to October, its biggest monthly increase since March. Statistics Iceland collects prices for about a week in the middle of each month, so offers outside that period may not appear in its figures.
A strong króna has likely made it possible to cut prices on some imported goods. Fruit, most of which is imported, fell 0.6% over the past two months. The scope for cuts is more limited for domestic farm products, the analysis says, because prices paid to farmers and wholesale milk prices are largely set outside retailers. The agricultural price committee raised wholesale prices for milk and dairy products by 1.4% in September, the third increase this year.
Wages are also adding pressure: the wage index rose 5.6% over the past year. The analysis says rising labour costs continue to put upward pressure on food prices, as both domestic food production and retail are labour-intensive sectors.
Annual food price inflation eased from 5.8% in March to 3.9% in October, but monthly increases have picked up again, reaching 0.3% to 0.4% since August. The analysis says a substantial fall in food prices is unlikely before the end of the year, and some accumulated costs could show up early next year when price freezes end.