According to newly published figures from Statistics Iceland (SI), the CPI rose 0.49% month-on-month in March, raising headline inflation to 4.3%, from 4.2% in February. Inflation excluding housing measured 4.8% during the month. Thus the housing component tends to dampen inflation these days, despite the hefty rise in house prices in the past year.
The March measurement is at the high end of published forecasts. We had projected that the CPI would rise 0.4% between months. Key items that took us by surprise included the housing component, which rose markedly between months, primarily because of a steep rise in imputed rent, whereas we had assumed that lower interest rates would offset the rise in house prices. On the other hand, end-of-sale effects were weaker than we had anticipated.