Cost Of Living In Iceland Increases

Icelandic consumers can expect up to 30% price hikes on groceries in the coming weeks. In conversation with RÚV, businesspeople of Bonus, Krónan, and Prís cite various reasons.

CEO of Bonus Björgvin Víkingsson claims that the hikes are due to increased electricity costs, wages, and prices of raw materials. CEO of Prís Gréta María Grétarsdóttir concurs, tracing the root cause to producers upping the costs.

In an interview with RÚV, chair of the Consumers’ Association Breki Karlsson encourages grocery businesses to take more responsibility. He claims the situation to be strange — that shops and intermediaries can threaten price increases beforehand. Breki states that shops can lessen the burden on consumers by decreasing demands for profitability or by reducing services.

37% increase on electricity

Grocery bills are not the sole cost expected to increase for residents of Iceland. A recent report by the Icelandic Confederation of Labour (ASÍ) shows electricity prices being raised by 37% in a single year. Since 2018, the price on kilowatts per hour has increased by 9%-44%, depending on suppliers.

Straumorka has raised its prices the most. Orka Heimilanna increased its prices the least, and boasts the cheapest electricity among the nine suppliers today. HS Orka is the most expensive retailer, charging 11,36 ISK per kW h, compared to Orka Heimilanna’s 7,97 ISK. Consumers are free to switch between suppliers as they see fit.

ASÍ cites significant changes occurring in the domestic electricity market in the last two decades. Iceland has repeatedly benefitted from low prices, but the surging demand for green energy has placed strain on electricity costs.

Households and small business have started competing with more energy-intensive users for electricity, which is a situation ASÍ claims could have been prevented. With more proactive policies, ASÍ claims that the state of electricity prices could be rectified to benefit all users.