Iceland­ic Eco­nom­ic Weekly: 7 June 2022

Inflation decreased unexpectedly between months in August. The economy contracted slightly between months in the second quarter. At the same time, it has become clear that GDP growth was higher in 2023 than previously thought, and that the contraction was less pronounced in the first quarter. This week, the Central Bank of Iceland (CBI) publishes the balance of payment and the minutes of the last meeting of the Monetary Policy Committee (MPC).

Non-domestic payment card turnover in Iceland is higher this year to date than previously thought, according to updated figures published by the Central Bank of Iceland (CBI) last week. This week’s highpoint is the CBI’s interest rate decision on Wednesday.

Non-domestic payment card turnover in Iceland is higher this year to date than previously thought, according to updated figures published by the Central Bank of Iceland (CBI) last week. This week’s highpoint is the CBI’s interest rate decision on Wednesday.

Departure by non-domestic travellers from Leifsstöð International Airport in July were very similar to the previous year while departures by domestic tourists are somewhat fewer. August measurements for the consumer price index take place this week and several listed companies publish results.

Overnight stays by non-Icelandic travellers across all registered accommodation types contracted by 1.4% between years in June. This contraction is lower than that measured in non-domestic tourist numbers and payment card turnover

The volume of travellers to Iceland decreased by 9% in June this year compared to June 2023. Unemployment was 3.1% in June, slightly higher than the same time last year.

High interest rates have encouraged savings and detracted from demand in the economy. Household deposits had grown by 20% in May this year from the same month in 2023, according to the Central Bank of Iceland’s (CBI) newly published Hagvísar. Demand deposits have increased most.

The consumer price index (CPI) rose by 0.48% in June. As a result, inflation measured 5.8%, down from 6.2%. Turnover based on March-April VAT reports contracted by 4.6% in real terms and the wage index rose by 0.2% in May, according to figures released by Statistics Iceland last week.

The housing price index was up by 1.4% in May and the rental price index by 3.2%, according to figures published last week. While the Bank of England maintained an unchanged policy rate, the Swiss National Bank lowered its rate by 0.25 percentage points. Of most interest domestically this week is without doubt the CPI, to be published by Statistics Iceland on Thursday.

Last week, we saw the publication of unemployment figures, tourist numbers and domestic payment card turnover in May. The US Federal Reserve kept its policy rate unchanged. Later today, the Housing and Construction Authority (HMS) releases the housing price index.