Iceland Inflation Hits Two-Year High

The annual inflation rate rose to 5.6% year-on-year in August 2026 from 5.3% in the previous month, and marking the highest reading since August 2024. Prices increased faster for food and non-alcoholic beverages (4.1% vs 3.9% in July), clothing and footwear (0.7% vs -1.6%), housing, water, electricity, gas and other fuels (6.8% vs 6.5%), information and communication (5.3% vs 4.8%), recreation, sport and culture (3.5% vs 3.2%), and education services (11.0% vs 4.1%). Meanwhile, inflation eased for transport (9.9% vs 10.0%), health (3.9% vs 4.0%), and restaurants and accommodation (5.0% vs 5.1%). Inflation also slowed slightly for insurance and financial (3.7% vs 3.8%) and personal care, social protection and miscellaneous goods and services (4.9% vs 5.0%), while inflation in alcoholic beverages, tobacco and narcotics remained unchanged at 3.7%. On a monthly basis, consumer prices eased to 0.2% in August, from 0.4% in the previous month.

The annual inflation rate rose to 5.3% year-on-year in July 2026 from 5.2% in the previous month, marking the highest level since March. Prices increased for transport (10% vs 9.9% in June), recreation, sport and culture (3.2% vs 2.8%), restaurants and accommodation services (5.1% vs 4.6%), information and communication (4.8% vs 3.6%), and alcoholic beverages, tobacco and narcotics (3.7% vs 3.3%). Meanwhile, inflation eased for furnishings, household equipment and routine household maintenance (0.1% vs 0.2%), health (4.0% vs 4.1%), personal care, social protection and miscellaneous goods and services (5.0% vs 5.7%), and education (4.1% vs 4.2%). Deflation in clothing and footwear also deepened (-1.6% vs -1.2%), while inflation held steady for food and non-alcoholic beverages at 3.9% and housing and utilities at 6.5%. On a monthly basis, consumer prices increased 0.4% in July, down from 0.9% in June.

The annual inflation rate in Iceland edgd up to 5.2% year-on-year in June 2026 from 5.1% in the previous month. Upward price pressures were primarily driven by transport (9.9% vs. 7.9%), information and communication (3.6% vs 2.9%), recreation, sport and culture (2.8% vs 2.7%), while furnishings and household equipment prices rebounded by 0.2% after a 0.4% decline in the previous month. Inflation in educational services stood at 4.2%. At the same time, price growth eased for food and non-alcoholic beverages (3.9% vs 4.2%), housing and utilities (6.5% vs 6.6%), restaurants and accommodation services (4.6% vs 5.1%), health (4.1% vs 4.4%), insurance and financial services (3.9% vs 4.1%) and alcoholic beverages and tobacco (3.3% vs 3.5%). Meanwhile, clothing and footwear prices reversed course, falling 1.2% after rising 0.9% in May. On a monthly basis, consumer prices rose 0.9% in June, the fastest increase in four months, accelerating from the 0.1% rise recorded in May.