The inflation rate in Iceland rose to 4.5% year-on-year in December 2025 from 3.7% in the previous month.
This marked the highest reading since January as prices increased for housing, water, electricity, gas and other fuels (7.1% vs 6.5% in November), health (4.2% vs 3.7%), communications (1% vs 0.7%), recreation and culture (2.8% vs 2.3%), hotels, cafés, and restaurants (5.4% vs 4.8%), and miscellaneous goods and services (4.1% vs 3.5%).
At the same time, costs recovered for clothing and footwear (0.8% vs -2.3%), furnishings and household equipment (0.3% vs -1.2%), and transport (2.3% vs -0.1%), while price growth remained unchanged for alcoholic beverages and tobacco (5.4%) and educational services (2.4%).
Meanwhile, inflation slowed for food and non-alcoholic beverages (5.5% vs 6%).
On a monthly basis, consumer prices rose by 1.2% in December, the fastest pace in over a year, rebounding from a 0.5% decline in the previous period.