FX.co ★ Iceland Inflation Rate Edges Down to 4.0%

In July 2025, Iceland experienced a slight decrease in its annual inflation rate, which fell to 4.0% from 4.2% in June. This marginal drop was reflected across various sectors: food and non-alcoholic beverages saw price growth temper to 5.0% from 6.0%; alcoholic beverages and tobacco prices eased to 5.6% from 5.8%; housing and utilities moderated to 7.1% from 7.2%; recreation and culture slowed to 2.9% from 3.3%; and communications dipped to 2.5% from 2.7%. Additionally, there was a further decline in costs for furnishings and household equipment, which fell by 0.9% compared to a 0.3% decrease previously. Notably, prices rose for clothing and footwear (increasing to 2.9% from 1.4%), transport (rising to 2.5% from 2.0%), and miscellaneous goods and services (up to 4.6% from 4.0%). On a month-to-month basis, consumer price growth slowed to 0.3%, down from 0.8% in the prior month.