Iceland’s Inflation Rate Rises from December Level

2026-01-29 - 11:32

Iceland’s annual inflation rate increased to 5.2 % in January 2026, up from 4.5 % in December, according to newly published figures from Statistics Iceland. As reported by Vísir, the consumer price index (CPI), with December 2025 as the base, reached 668.3 points, marking a 0.38 % rise from the previous month. What's the Story? Annual inflation at 5.2 % in January, up from 4.5 % in December Consumer price index at 668.3 points, up 0.38 % month-on-month Clothing and footwear prices down 7.4 %; airfares abroad down 10.8 % Food and non-alcoholic beverages up 1 % Road tolls up 633.4 % following vehicle tax changes Central Bank of Iceland policy rate at 7.25 %; next rate decision on 4 February Bundles of 1000 ISK banknotes. Photo: Golli. Consumer Prices Climb The latest data show a mixed pattern of price movements across key categories. Clothing and footwear prices fell by 7.4 %, and furniture and household appliances dropped by 5.4 %, each exerting downward pressure on the index. Airfares abroad also declined by 10.8 %. Conversely, food and non-alcoholic beverages rose by 1 %. Changes to vehicle-related taxes at the start of the year influenced the CPI. The abolition of oil tax and fuel excise duties was offset by higher carbon tax, new mileage charges, and adjustments to vehicle excise tax and electric vehicle subsidies. These shifts helped push road tolls up by 633.4 % and contributed to higher overall transport costs. Despite notable falls in fuel prices, with gasoline down 27.4 % and diesel down 24.2 %, their effects were counterbalanced by rising vehicle purchase prices. The policy interest rate remains at 7.25 %, with the next decision by the Central Bank of Iceland scheduled for 4 February.