Inflation Forecast to Rise to 5.4% in March

2026-03-13 - 12:06

Inflation in Iceland is expected to increase slightly in March, according to a new economic forecast published by Landsbankinn’s research department. The bank’s analysts project annual inflation of 5.4% for March, up from 5.2% recorded in February. As reported by RÚV, the estimate points to a modest monthly increase in price pressures across the economy. What's the Story? Inflation forecast at 5.4% in March by Landsbanki Research, up from 5.2% in February Possible policy rate increase of 0.25 percentage points expected at next decision by the Central Bank of Iceland’s Monetary Policy Committee Collective agreements include termination clause if inflation exceeds 4.7% by August Central Bank of Iceland. Photo: Facebook. Interest rate outlook Researchers at Landsbankinn attribute much of the expected rise to higher fuel prices. The forecast notes that uncertainty surrounding the duration of the conflict in the Middle East may continue to influence fuel costs and, in turn, inflation levels. The outlook also highlights potential implications for labour agreements in Iceland. Current collective agreements contain provisions allowing them to be terminated if inflation exceeds 4.7% by August. Landsbankinn’s research department states that the likelihood of the agreements’ underlying assumptions holding has decreased. Attention now turns to the upcoming interest rate decision by the Central Bank of Iceland. The bank’s Monetary Policy Committee is scheduled to announce its next policy rate decision on Wednesday. Landsbankinn Research expects the committee to raise the policy rate by 0.25 percentage points. Analysts at Íslandsbanki have issued a similar forecast. For broader context on the country’s fiscal outlook, see Iceland Review’s coverage of Iceland’s economy.