In the fourth quarter of 2025, the Faroe Islands experienced a moderation in the annual inflation rate, which decreased to 0.7% from 1.1% in the preceding quarter. Notably, there was a slower rise in prices for several categories, including food and non-alcoholic beverages, which increased by 3.8% compared to 4.6% in the third quarter. Similarly, there was a decrease in the rate of price increases for communication (rising by only 0.2% versus 0.9%), recreation and culture (up by 4.6% compared to 4.9%), and miscellaneous goods and services (which saw a 1.8% increase instead of 1.9%).
Conversely, deflation intensified in sectors such as housing and utilities, where prices dropped by 8.9% following a 5.7% decrease, and furnishings and household equipment, which saw a 2.4% decline compared to a previous reduction of 0.5%. On the other hand, price acceleration was recorded in several areas, with transport costs increasing by 1.7% as opposed to 0.5%, and alcoholic beverages and tobacco experiencing a significant rise of 8.9% compared to 4.7%. Health sector prices rose by 0.7%, previously stagnant, and the education sector saw a 4.8% increase following a 3.8% rise. Prices in restaurants and hotels grew by 6.6%, compared to a 5.6% increase earlier. Meanwhile, deflation in clothing and footwear lessened, with a price decline of 1.4% compared to 1.7%.
On a quarterly basis, there was a 0.4% decrease in consumer prices in the fourth quarter, a reversal from a 0.2% increase in the prior quarter.
