According to newly published figures from the Central Bank (CBI), Icelanders used their payment cards to the tune of over ISK 125bn in April, a YoY decline of 2.4% in ISK terms, or 6.6% in price- and exchange rate-adjusted terms. This was the first month since October 2023 that card turnover has shrunk between years.
Payment card turnover starts to ease
Icelanders’ payment card turnover shrank in April, both in the domestic market and overseas, in the first year-on-year contraction since late 2023. It could be a foretoken of further cooling in the local economy.
Card use subsided both within Iceland and abroad during the month, shrinking in real terms by 8% in the domestic market and 1.6% in the overseas market. It is a major shift from the not-too-distant past. Domestic turnover had already started to soften in recent months, but not to such a decisive degree. Foreign turnover, which had surged and functioned as the driver of total card turnover in the recent term, has now contracted for the first time since April 2024.
That said, interpretations of April figures should allow for the fact that most of this year’s Easter-related spending occurred in March, while last year it took place in April. As the chart above indicates, card turnover spiked in April 2025 as compared with the months before and after. In addition, the adoption of the per-kilometre charge to replace petrol taxes may well have some impact on 2026 card turnover in comparison with 2025. The per-kilometre charge is collected via invoice sent to the car owner’s online bank account, while the petrol tax was collected mainly via payment card turnover, as other indirect taxes are.
Icelanders scale down overseas travel
Newly published card turnover data align well with developments in Icelanders’ trips overseas, which have declined YoY in each month of 2026. Icelanders have taken 189,000 trips abroad year-to-date, some 15.5% fewer than over the same period in 2025. Presumably, the cooling of the economy, persistent inflation, and high interest rates are prompting the slowdown, although it is also possible that the market is saturated for the present, after last year’s surge in travel. Furthermore, airline seat capacity declined somewhat after airline Play discontinued operations, and airfares have generally risen.
Card turnover figures also accord with household sentiment, which has dimmed significantly in the recent term, as we discussed here. Expectations about the economy have deteriorated steadily in recent quarters, and the Consumer Confidence Index is at its lowest in nearly six years.
Private consumption growth to lose pace?
Payment card turnover is a reliable indicator of private consumption growth. Figures for Q1 will be published at the end of the month, and they are likely to show that consumption grew, but at a slower pace than before.
The most recent data suggest that if the current pattern continues, private consumption can be expected to taper off considerably more in Q2. It is important to avoid drawing overly sweeping conclusions from single-month measurements, though, and it will be interesting to see what the next few months have in store.
These card turnover figures have been released just as the Central Bank’s (CBI) Monetary Policy Committee is meeting to set interest rates. They could affect the Committee’s assessment, tipping the scales towards a smaller rate hike due to signs of economic cooling. We expect the CBI to announce a policy rate hike of 0.25% when it makes the decision public tomorrow morning.
