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Landsbankinn forecasts inflation rise to 5.9% in July with airfares to increase by 14.9% and clothing prices to drop by 9.2%

Wednesday 10th 2024 on 17:30 in  
Iceland

Landsbankinn projects that inflation will rise to 5.9 percent in July, marking a 0.1 percentage point increase month-on-month. This forecast predicts that airfares will rise by 14.9 percent, while clothing and shoe prices will decrease by 9.2 percent.

The bank’s analysis division anticipates that the consumer price index will increase by 0.15 percent month-on-month in July, and that annual inflation will rise from 5.8 percent to 5.9 percent.

“We expect July to be a fairly typical month, with summer sales leading to a decrease in the index, and airfares to foreign countries increasing,” the bank’s forecast states. These two factors are the most significant price changes predicted by the bank. It is estimated that clothing and shoe prices will decrease by 9.2 percent month-on-month. The forecast suggests that clothing and shoe prices generally increase month-on-month throughout the year, except in January and July when sales commence.

The bank’s forecast also anticipates that airfares will rise by almost 15 percent month-on-month. “There is typically a clear seasonal fluctuation in airfares to foreign countries. Airfares peak in July, decrease in the autumn, and then rise again before Christmas and Easter.”

In most other categories, price changes are predicted to be around one percent. The third largest price change forecasted falls within the category of furniture and household goods, which is expected to decrease by 1.3 percent month-on-month.

The bank predicts that inflation will remain relatively stable in August and September, but it will decrease to 5.4 percent in October.