Year-on-year house price inflation has gained pace slightly in the past two months and currently measures 3.2%. Even so, this is a vast change from the situation in summer 2022, when house prices soared by 25% between years. House prices in regional Iceland have risen the most in the past year, or by 7.0%. Next in line are capital area condominium prices, are up 2.8% in the past year, whereas detached home prices in the capital area have fallen by 1.0% over the same period.
Breakdown of upward- and downward-pushing components
Apart from from the housing component, food and beverages have been the main catalysts of the October increase in the CPI, rising by 1.0% MoM (0.14% CPI effect). The price of lamb, which increased 7.7%, weighs heavily in this item, although dairy and fruit prices rose significantly as well.
The culture and recreation component rose by 0.95% (0.10%), owing mainly to a more than 11% jump in the price of books and a 2% increase in the price of international package tours.
Travel and transit increased marginally in price, or by 0.2% (0.02%), due to the offsetting impact of a 2.0% decline in airfares (-0.04%) and a 1.0% increase in petrol prices (0.03%). It is noteworthy that airfares should fall this month because, apart from the COVID-19 season, they have generally increased in October.