FX.co ★ Iceland Inflation Hits Two-Year High

The annual inflation rate accelerated to 5.6% year-on-year in August 2026, up from 5.3% in July, reaching its highest level since August 2024. Price growth picked up in several major categories, including 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%).

By contrast, inflation moderated slightly in transport (9.9% vs 10.0%), health (3.9% vs 4.0%), and restaurants and accommodation (5.0% vs 5.1%). It also eased marginally for insurance and financial services (3.7% vs 3.8%) and for personal care, social protection and miscellaneous goods and services (4.9% vs 5.0%). Inflation in alcoholic beverages, tobacco and narcotics was unchanged at 3.7%.

On a monthly basis, consumer prices rose by 0.2% in August, down from a 0.4% increase in the previous month.