Iceland has once again become the most expensive country in the world, ahead of Switzerland. Bloomberg reported this on May 28, citing calculations by the Icelandic trade union of knowledge workers Viska, which are based on data from Eurostat and the country’s Central Bank.
Trade union economist Vilhjalmur Hilmarsson estimates that Iceland's price level is now about three percentage points higher than Switzerland's. The last time Iceland topped the ranking of the most expensive countries was in 2018.
Experts attribute the rise in prices to the post-pandemic tourism boom, which became the main driver of economic recovery, but at the same time increased inflationary pressure. According to Hilmarsson, tourism increases the cost of services and increases wages, and also affects the housing market due to competition between locals and tourists, particularly in the short-term rental segment.
Data shows that food prices in Iceland are 44% higher than in other Scandinavian countries. Dairy products and eggs are 75% more expensive, and meat is 71% more expensive. The cost of drinks also remains high: a pint of beer can cost up to 1.8 thousand kroner (€12.57), and coffee in a cafe can cost up to 1 thousand kroner (€6.98).
Against the backdrop of such prices, tourism authorities are recording the first signs of declining interest in traveling to Iceland. Economists warn that over-reliance on labor-intensive industries, especially tourism, could continue to fuel inflationary pressures in the country.
