FX.co ★ Iceland Inflation Rate Hits 2024-Highs

Iceland experienced a rise in its annual inflation rate to 5.2% in January 2026, marking the highest level since September 2024, compared to 4.5% in December 2025. The acceleration in inflation was noticeable across several sectors: housing and utilities climbed to 7.2% from 7.1%, transport increased to 4.6% from 2.3%, food to 5.8% from 5.5%, recreation and culture to 3.4% from 2.8%, hotels and restaurants to 6% from 5.4%, communication to 2.7% from 1%, and education to 3.9% from 2.4%. Conversely, prices for furnishings saw a decline, dropping to -0.4% from 0.3%. Additionally, there was a slowdown in inflation for the health sector, which decreased to 3.5% from 4.2%, and for alcoholic beverages and tobacco, which fell to 4.1% from 5.4%. Meanwhile, the inflation rate for clothing and footwear remained stable at 0.8%. On a monthly basis, inflation eased to 0.4% in January, down from December's 1.2%.