Weekly bulletin 5 February 2024

Inflation has decreased in recent months and, in addition, fewer components have increased by over 10% in the past 12 months.

5 February 2024

The week ahead

Wednesday is an interest rate decision date at the Central Bank of Iceland (CBI) and sees the publication of Peningamál. We forecast unchanged rates. Arion Bank, Festi and Marel publish results.
On Thursday, Íslandsbanki, Sjóvá, SKEL fjárfestingarfélag and Play publish results.
On Friday, the Icelandic Tourist Board releases departures from Leifsstöð International Airport and the Directorate of Labour publishes registered unemployment.

Image of the week

Inflation has decreased in recent months and, in addition, fewer components have increased by over 10% in the past 12 months. Over 30% of components had increased by over 10% in the past 12 months in November 2023 and only 18% now in January.

Highlights of the previous week

The Consumer Price Index fell by 0.16% between months in January, bringing 12M inflation down from 7.7% to 6.7% - it peaked at 10.2% in July of 2023. Air fares from Iceland decreased unexpectedly between months and new car prices increased much less than expected while other components changed more or less in line with expectations. We expect inflation to continue to decrease in the next months, to 6.1% in February, 6.3% in March and 5.1% in April. Dwindling inflation in the next three months is mainly a result of the significant increase that occurred between months in February through to April 2023; months that disappear from 12M inflation figures in coming months.
The CBI published the results of its market expectations survey carried out 22-24 January before Statistics Iceland released inflation figures for January. There was no change to market expectations for inflation in the first half of 2024 as compared with the November survey, with the median response unchanged at 6.9% for the first quarter and 6.0% for the second quarter. Instead of 5.0% inflation in the fourth quarter of 2024, the market now expects 5.5% inflation. Many more respondents than in November now consider the monetary policy stance to tight and most expect the first policy rate cut in the second quarter.
The Icelandic Tourist Board published its summary for 2023.
Landsbankinn and Icelandair (IR presentation) published annual financial statements for 2023, Eik published internal accounts and Alvotech announced positive results of pharmacokinetic testing of AVT03.
ÍL-sjóður offered switches.

Statistics and market data

Weekly bulletin 5 February 2024 (PDF in Icelandic)

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