FX.co ★ Iceland Inflation Rate Hits 9-Month High

In October 2025, Iceland's annual inflation rate ticked up to 4.3%, a slight increase from September's 4.1%, marking the highest level seen since January of the same year. This rise was primarily driven by accelerated price increases in sectors such as housing and utilities, which saw a jump to 7.1% from 6.5% in September. Similarly, the cost of alcoholic beverages and tobacco increased from 5.5% to 5.8%, health expenses rose from 2.6% to 3%, and recreation and culture went up from 2.9% to 3.4%. Additionally, price trends saw a reversal for clothing and footwear, moving from a 0.2% decrease to a 0.2% increase, and home furnishings and similar items shifted from a decline of 0.6% to an increase of 1.3%. Conversely, price growth moderated in other categories, with food and non-alcoholic beverages decreasing slightly from 6.1% to 5.8%, and transport and communications both dipping from 1.1% to 0.8%. The hospitality sector, encompassing hotels, cafés, and restaurants, noted a decrease from 5.6% to 4.7%, while prices for miscellaneous goods and services saw a marginal decline from 4.3% to 4.2%. Education costs held steady at a 2.4% increase. On a monthly basis, consumer prices surged to a four-month high of 0.5% in October, escalating from a 0.1% rise noted in the previous month.