Joint declaration could mark turning point in Iceland’s inflation fight

A joint declaration by the government, municipalities, the Icelandic Confederation of Labour and the Confederation of Icelandic Enterprise could mark a turning point in the fight against inflation, Prime Minister Kristrún Frostadóttir said, according to mbl.is. The parties signed the declaration yesterday afternoon.

Frostadóttir said the agreement also represented a breakthrough in labour-market talks. She said it would bring stability through next year, noting that the parties had not terminated their agreements and had committed to keeping increases across the system in line with the 2.5% inflation target. She said the commitments would help shape expectations and soon feed into inflation figures.

After the declaration was announced, the government outlined measures to improve conditions in the labour market. The state will limit increases to fixed-amount taxes to 2.5% next year, except for the kilometre charge. The same limit will apply to the fees charged by state agencies.

The Association of Local Authorities is sending the same message to municipalities, while the Confederation of Icelandic Enterprise is urging its member companies to do everything possible to restrain price increases and uphold the goals of the Stability Agreement.