According to data analyzed by a professional economist, Vilhjálmur Hilmarsson of the Viska service workers’ union, based on Eurostat and the Central Bank of Iceland, current price levels in Iceland exceed those in Switzerland by 3 percentage points. Such a trend was last observed in 2018. This fact demonstrates the cyclical nature of Iceland’s economy, which typically experiences periods of growth and decline.
The further development of the situation is attributed to the strengthened demand in the tourism sector, the main driver of the country’s economic growth. The post-pandemic surge in tourist arrivals has stimulated economic recovery and caused price increases, which are currently being regulated by the Central Bank of Iceland.
Vilhjálmur Hilmarsson noted that tourism significantly increases inflationary pressures in the service sector by raising wages and directly affecting the housing market. This is particularly evident in the competition for accommodation between tourists using platforms like Airbnb and local residents.
Eurostat data from 2024 show that, when adjusted for purchasing power parity, price levels in Switzerland remain over 7 percentage points above those in Iceland.