Iceland Inflation Lowest In Over 4 Years

(RTTNews) - Consumer price inflation in Iceland slowed for a third straight month in March and sunk to its lowest level in over four years, preliminary data from Statistics Iceland showed on Thursday.

The consumer price index rose 3.8 percent year-on-year in March after a 4.2 percent in February. This was the weakest increase since December 2020, when inflation was 3.6 percent.

Among the main CPI components, utility costs logged the biggest increase of 7.6 percent. This was followed by alcoholic beverages and tobacco as well as miscellaneous goods and services where prices were more than 5 percent higher. Food and non-alcoholic beverages registered a 4.9 percent rise in prices. The CPI rose 0.37 percent from the previous month.

The CPI excluding housing costs rose 2.5 percent year-on-year and 0.31 percent from the previous month.

Earlier this week, the statistical office projected inflation to slow to 3.5 percent this year from 5.9 percent last year. Price growth is expected to average 2.7 percent next year and to hover around the inflation target thereafter.

"Inflation is set to decrease further. Economic growth has eased, long-term wage agreements have created predictability in wage developments, and the housing market has slowed down," the statistical office said in its latest set of macroeconomic projections.

In March, the Central Bank of Iceland lowered its benchmark rate for the fourth consecutive meeting, down to 7.75 percent, but policymakers stressed on the need for caution in future as inflationary pressures remain, and in view of the heighted global economic uncertainty.