Inflation in Iceland has run at an average of nearly 16 percent per year since it first started being measured.
That means that things which used to cost ISK 1 about 60 years ago now cost nearly ISK 10,000. The situation is very different in neighbouring Norway, however. Their NOK 1 items from 60 years ago would now sell for NOK 24. A big difference by any standard.
“High persistent inflation brings wealth to society unfairly, even randomly,” says Breki Karlsson, director of the Institute for Financial Literacy. He told RÚV he remembers when he was a child he could return glass fizzy drinks bottles and buy an ice lolly for the deposit. “In 35 years the value of the bottle tripled, however the ice lolly has increased in price more than twenty-five fold.”
Breki points out that since records have been kept, inflation in Iceland has averaged 15.6 percent per year. “That means that prices double, on average, every four-and-a-half years. Things which cost ISK 1 sixty years cost ISK 9,600 today.”
By comparison, Norwegian inflation has averaged 4 percent over the last 60 years, which means that prices double every 15 years, instead of the 4.5 years in Iceland. This means that things which cost 1 króna back then cost 24 krónur now, but 9,600 krónur in Iceland.