Stronger Króna Hasn’t Made Things Cheaper - The Reykjavik Grapevine

Stronger Króna Hasn’t Made Things Cheaper

Published May 3, 2017

Elías Þórsson
Photos by
Art Bicnick

During the past year, the exchange rate index of the Icelandic króna has increased a whopping 25%, despite that prices of imported goods have not followed suit, reports RÚV.

Much of products sold in the country have to be imported from abroad, which means that prices and the currency rate are intrinsically linked. So everything being equal, prices should drop according to the strengthening of the króna. This, however, has not been the reality. 

For instance, the price of clothes has dropped 6% during the corresponding period, while the price of imported food products has decreased by just 7%. Therefore, the incredible ascend of the currency has not reached the pockets of consumers.

Furthermore, custom rates were decreased by 7-8% last year, which should have pressed down the prices of imported goods even more. Despite that the price of construction materials has actually increased by 1%.

Margrét Sanders, the head of the Federation of Trade & Services, claims that it is important to note that wages have increased by 15% over the past 12 months.

One of the main complaints heard from tourists is how expensive Iceland is, and with the króna expected to increase even further in value, those complaints should become even louder.

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