According to newly published figures from the Central Bank (CBI), Icelanders used their payment cards to the tune of over ISK 119bn in February, an increase of 4.8% in ISK terms relative to the same month in 2025. In price- and exchange rate-adjusted terms, the real increase measures 1.2% year-on-year. Real card turnover therefore continues to grow, albeit much more slowly than before.
Card turnover within Iceland contracts
Payment card turnover continues to grow in real terms, owing entirely to Icelanders’ card use abroad, while card turnover within Iceland shrank between years. The next few months will determine whether this is a sign that household demand is weakening or merely a short-term fluctuation.
As in the recent past, Icelanders’ overseas spending is the mainstay of growth. In real terms, card turnover abroad grew by 12% YoY, while turnover at home shrank by 2%. This was the first contraction in the domestic market since August 2025, and the largest one since autumn 2024. It is wise to avoid overinterpreting figures for individual months, however, as they can fluctuate widely. Even so, this month’s shift could indicate a slowdown in household demand.
Card turnover abroad continues to rise, but at a reduced pace
Even though card turnover abroad increased in real terms, data from the Icelandic Tourist Board indicate that Icelanders’ trips abroad are declining in number. That decline measured 11% YoY in February. Growth in overseas card turnover has lost momentum, subsiding to the aforementioned 12% in real terms, its weakest in a year.
Icelanders’ overseas trips have now fallen in number for two consecutive months, after a record-breaking 2025. The chillier economy could be making its presence felt, but it is also possible that the market is saturated for now, after last year’s boom. It will be interesting to keep abreast of developments in the months to come.
Is private consumption growth losing steam?
Payment card turnover is a reliable indicator of private consumption growth. Private consumption was humming along at a good clip last year, growing in real terms by 4.3%, its fastest since 2022. Growth was strongest in Q4, notwithstanding the steady deterioration in the economic outlook over the course of the year, the slide in households’ expectations, and persistent inflation.
There are rational explanations for the jump in Q4, however. The period was strongly affected by a surge in households’ motor vehicle purchases, as year-end hikes in excise taxes gave buyers the incentive to lock in car purchases before the turn of the year. Despite recent fluctuations, many indicators imply that most households are well positioned. Accumulated savings and recent real wage gains have supported their consumption capacity.
Based on the most recent card turnover figures, it can be assumed that private consumption continued to grow in Q1, but at a reduced pace. This lines up well with the situation we described in our macroeconomic forecast from late January. In a cooling economy with a weaker labour market, private consumption growth can be expected to subside. According to our forecast, it will measure 2.4% in 2026. Private consumption is an important element in GDP growth, as it has been one of the main drivers of growth in the recent term. Slower growth in private consumption and temporary headwinds in the export sector are therefore the main reasons why the outlook is for weaker GDP growth in 2026 than in 2025.
