FX.co ★ Iceland Inflation Rate Lowest Since 2020

In March 2025, Iceland's annual inflation rate decreased for the third consecutive month, reaching 3.8%, down from 4.2% in February. This marks the lowest level since December 2020. The decline in inflation is attributed to a slowdown in price increases across several sectors: housing and utilities decreased to 7.6% from 8.6% in February, transport rates fell to 1% from 1.7%, alcoholic beverages and tobacco prices decreased to 5.6% from 5.7%, and furnishing and household equipment costs declined to 0.4% from 1.5%. Health costs also saw a reduction, decreasing to 3.5% from 4.3%, and miscellaneous goods and services moderated to 5.1% from 5.3%. Conversely, food and non-alcoholic beverage prices rose slightly to 4.9% from 4.6%, and communication costs increased to 2.4% from 2.2%. Additionally, deflation rates eased for clothing and footwear, moving to -2.3% from -2.5%, and for hotels, cafes, and restaurants, improving to -0.4% from -0.9%. On a month-to-month basis, consumer prices grew at a reduced rate of 0.4% in February, compared to 0.9% in January.