Inflation in Iceland reaches lowest level since December 2021 at 5.4 percent

Inflation in Iceland has reached its lowest level since December 2021, now standing at 5.4 percent after a decrease of 0.6 percentage points from the previous month. The Consumer Price Index (CPI) fell by 0.24 percent month-over-month, as reported by Statistics Iceland.

Notably, prices for clothing and footwear rose by 5 percent while the calculated rent increased by 0.7 percent. In contrast, airfares to international destinations saw a significant drop of 16.5 percent, and the cost of school meals decreased by 35.9 percent, largely due to new regulations making lunches in primary schools free of charge.

Over the past twelve months, the CPI has increased by 5.4 percent overall and by 2.8 percent when excluding housing costs. Interest rates have remained at 9.25 percent for over a year, with the Central Bank set to announce its next decision on interest rates next week.

The current economic indicators suggest a potential shift in the economic landscape as households feel the effects of varying price changes in essential goods and services. The continued monitoring of inflation rates may inform upcoming monetary policy decisions.