FX.co ★ Faroe Islands Inflation Rate Lowest Since 2020

In the second quarter of 2025, the Faroe Islands experienced a reduction in their annual inflation rate to 0.7%, down from 1.3% in the prior quarter, marking the lowest level since the fourth quarter of 2020. This decrease was attributed to a drop in costs for furnishings and household equipment, which decreased to 0.4% from 3.0% in the first quarter, and a slight drop in recreational and cultural expenses, which fell to 0.4% from 0.5%. The prices for clothing and footwear continued to decline, showing a downward trend from -2.7% to -3.3%, as did transportation, which decreased from -0.1% to -0.6%. Furthermore, there was a notable decrease in prices related to housing and utilities, plummeting to -4.9% from a previous rise of 2.7%. However, certain sectors saw inflationary pressures, including hotels and restaurants, which surged to 7.2% from 3.0%, communication services, which increased to 1.6% from 1.1%, and food and non-alcoholic beverages, inching up to 4.7% from 4.6%. On a quarterly basis, consumer prices witnessed a slight fall of 0.1%, effectively reversing the 0.9% increase recorded in the previous quarter.