According to newly published figures from the CBI, Icelanders used their payment cards to the tune of just under ISK 146bn in April, a 3% year-on-year increase in nominal terms but a decline of almost 1% in real (price- and exchange rate-adjusted) terms. April was a watershed for payment card turnover, which declined for the first time since October 2023 and continued to fall in May, albeit not as strongly.
Card turnover continues to cool
Payment card turnover shrank in real terms in May, for the second month running. The contraction was less pronounced than in April, however, as the Central Bank (CBI) updated that month’s figures, yielding a smaller downturn than previously estimated. Nevertheless, this indicates that household consumption has slowed, and we expect private consumption growth to lose pace this year.
As in the recent past, foreign turnover is the catalyst, while turnover in the domestic market has sagged. In May, households’ card turnover in the Icelandic market shrank by nearly 5% YoY, whereas their turnover abroad grew by 13%.
The CBI’s revision of data for April resulted in a smaller contraction in card turnover than previous figures had indicated. The original figures suggested that turnover had shrunk by nearly 7% YoY in real terms, whereas the updated numbers show a contraction of 1.8%. It is therefore far smaller than originally thought, and the figures are more consistent with developments in recent months, including May. Most likely, the comparison was skewed by the timing of the Easter holidays, which came unusually early this year. If this factor were removed from the equation, the April contraction would probably be even smaller. The updated figures also accord better with other statistics suggesting that household consumption will ease gradually rather than contracting abruptly.
Overseas travel declines, but foreign card turnover holds its ground
Last year was a record-breaker for Icelanders’ foreign travels. Icelandic nationals took nearly 700,000 trips overseas, shattering the record set in 2018. Things have slowed down this year, however, and Icelanders’ trips abroad are down by 14.5% YoY in 2026 to date. One possible reason for this could be that the market is saturated for the present after the buoyancy seen late last year, but it is more likely that the downturn is due mainly to changes in economic conditions, with a cooling economy, persistent inflation, and high interest rates dampening households’ appetite for travel.
The increase in foreign card turnover is noteworthy in that Icelanders’ departures from Keflavík Airport were down 11% YoY in May, which indicates that those who do travel are still spending rather freely while overseas.
What does this say about private consumption?
Private consumption took off in 2025, growing by 4.3% YoY, its fastest since 2022. Growth was unusually strong in Q4, however, not least because of the temporary spike in car purchases before the year-end. Households’ foreign consumption was brisk as well,
but things have changed this year. Even though private consumption is still on the rise, most indicators suggest that the pace of growth will ease. Preliminary figures for Q1, households’ expectations, and developments in card turnover support this supposition. Private consumption was up 2.2% YoY in real terms in Q1/2026. Households’ expectations are now at their bleakest in six years, and card turnover continues to shrink.
Even so, households remain well positioned. Their savings are still relatively sizeable, and real wages have continued to grow, although the pace will probably subside over time. This will support private consumption in the immediate future. In our most recent macroeconomic forecast, we projected that private consumption growth would measure a modest 1.9% this year. The newest card turnover figures support that forecast. Further ahead, however, the outlook is for private consumption to regain momentum gradually as the economy firms up.
