Iceland’s Prime Minister Acknowledges Inflation Concerns

2026-01-30 - 13:18

Prime Minister Kristrún Frostadóttir has expressed disappointment over recent inflation figures, acknowledging the difficult economic circumstances faced by the country. As reported by RÚV, inflation reached 5.2% in January, an increase of 0.7 percentage points from December. This marked the second consecutive month of higher-than-expected inflation, a development that was not part of the government’s original expectations. What's the Story? Inflation in Iceland measured 5.2% in January 2026, up 0.7 percentage points from December 2025. Food and beverage prices rose by 1% in January. Car tax changes contributed to the inflation increase. Prime Minister Kristrún Frostadóttir described the figures as "disappointing." The Icelandic government remains committed to fiscal sustainability and a surplus above zero next year. A government meeting confirmed consensus on the fiscal plan moving forward. Over a month, Iceland has experienced 1% increase in food and beverage prices. Photo: Golli. Speaking on the matter, Frostadóttir described the situation as “disappointing” but stressed the importance of maintaining a long-term perspective. Despite falling airfares, lower spending on household goods, and reductions in sales, inflation continues to rise due to various factors, including a 1% increase in food and beverage prices and the impact of changes in car taxes. Frostadóttir noted that the government’s long-term priority is to ensure fiscal sustainability. At a government meeting this morning, the minister confirmed that there was unanimous support for the government’s fiscal plan, with the goal of achieving a surplus next year.