{"id":603931,"date":"2026-08-25T07:54:24","date_gmt":"2026-08-25T07:54:24","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/603931\/"},"modified":"2026-08-25T07:54:24","modified_gmt":"2026-08-25T07:54:24","slug":"rising-prices-in-recent-years-fuel-the-pro-european-movement-on-an-island-that-will-put-its-potential-eu-accession-to-a-vote-at-the-end-of-the-month-high-cost-of-living-moves-worlds","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/603931\/","title":{"rendered":"Rising prices in recent years fuel the pro\u2011European movement on an island that will put its potential EU accession to a vote at the end of the month: High cost of living moves world\u2019s most expensive country closer to the EU | International"},"content":{"rendered":"

Six small tomatoes, 980 krona, almost \u20ac7 (around $8.15) at the current exchange rate. A hamburger at a very basic eatery, \u20ac28. A plain pepperoni pizza to go, over \u20ac22. A postcard of the unmistakable \u2014 and beautiful \u2014 Icelandic fjords, almost \u20ac5. Visiting Reykjavik in 2026 \u2014 and, needless to say, Iceland\u2019s most touristy spots \u2014 is a risky activity for your wallet. The remote, wealthy island, which will hold a key referendum on joining the European Union<\/a> on August 29, has since last spring carried the label of the most expensive country in the world. Not Switzerland, Norway, or those Caribbean islands where some of the largest U.S. fortunes have settled: the highest prices on the planet are found on this remote isle in the middle of the Atlantic, according to calculations by the Icelandic trade union V\u00edska. Over the past half century, no wealthy nation has been battered more by inflation.<\/p>\n

\u201cWe\u2019ve had years of price increases, but in the last three years it\u2019s been especially noticeable: everything is much more expensive,\u201d says Thorunn Davidsdottir as she comes out of a \u201cdiscount\u201d supermarket in Brei\u00f0holt, a working-class district in the eastern part of the capital. \u201cFood, restaurants, clothing\u2026 And shoes, especially shoes,\u201d the 55-year-old woman adds. She says, however, that she suffers the effects less than others around her: \u201cMy children have already left home, so it\u2019s just my husband and me left\u2026\u201d.<\/p>\n

Accumulated inflation and the referendum in which voters among the country\u2019s 400,000 inhabitants will decide whether to take a giant step toward becoming the EU\u2019s 28th member state might seem unrelated. But they are closely linked: if, according to the latest polls, just over half the population wants to join the bloc, it is largely because of the damage to their bank accounts.<\/p>\n

Many of those interviewed by EL PA\u00cdS during a bright early-summer week in Reykjavik and on the Sn\u00e6fellsnes peninsula believe that adopting the euro in a second step after accession \u2014 which would not be immediate: there would be a later, separate vote \u2014 would calm an inflationary fever that is already Icelanders\u2019 top concern in polls. Little wonder: so far this year, prices are rising at a 5% year-on-year pace, double the central bank\u2019s target of 2.5%.<\/p>\n

Icelanders\u2019 wages are high; very high compared with most continental European countries. Although the country lacks a formal minimum wage, the lowest pay levels exceed \u20ac3,000 ($3,500) gross per month at current exchange rates. But the cost of living is rising even faster. \u201cYou get paid a lot more, but you have to be more careful with spending,\u201d says Marcin B\u0142asik, a 50-year-old Polish truck driver who has spent more than half his life in the land of ice and fire, while unloading goods at the port of Rif, in the northwest.<\/p>\n

\u201cHigh prices are due mainly to lack of competition: here, oligopoly is almost a national sport,\u201d says economist Thorvaldur Gylfason, emeritus professor at the University of Iceland. To this crucial factor he adds another equally important one: the high transport costs for most products. \u201cWe import half of what we consume, mostly from continental Europe.\u201d And although the Icelandic krona, blamed by many, \u201cdoes not by itself play a major direct role in high prices, Iceland does have a long history of currency crashes, events that are usually accompanied by inflation.\u201d<\/p>\n

The word \u201cinflation,\u201d and its close cousin \u201cprices,\u201d are the two most repeated terms in the latest Article IV Consultation with Iceland<\/a>, the IMF\u2019s annual country review. In the opening lines of that text, published at the end of July, the Washington-based institution issued a warning \u2014 the shadow of a \u201cde-anchoring of inflation expectations,\u201d every economist\u2019s nightmare, is already hanging over the island \u2014 and a recommendation: \u201cThe policy priorities now are to return inflation sustainably to target.\u201d<\/p>\n

Aurora Pelier Cady, a 37-year-old Frenchwoman, moved in 2019 from very expensive Paris to today\u2019s even more expensive Reykjavik. \u201cBack then everything cost a lot, but it was still manageable. Now everything is insane,\u201d she says from the pastry shop she opened four years ago. At the time she still shared an apartment: even with her own business, she says she could not afford to rent alone. Today, despite the economy\u2019s good performance, she notices weaker local spending: \u201cWhat I sell isn\u2019t a basic necessity and you can tell.\u201d Part of that drop, however, she offsets with the tourism boom in a country that receives more than six visitors per inhabitant, compared with two in Spain.<\/p>\n

The country\u2019s official statistics agency has just put numbers on the inflationary spiral. With a per capita income one-third higher than the EU-27 average and consumption per person 15% higher, the jump in prices is staggering: 84%. Food is on average 58% more expensive than in its potential future EU partners. Private healthcare and education cost more than double what they do on the continent. And alcohol, heavily affected by taxation as in other Nordic countries, is almost three times as expensive.<\/p>\n

\"\"An Icelandic license plate that begins with the letters UE, in June in Reykjavik.PACO PUENTES<\/p>\n

\u201cEverything has risen enormously, but it\u2019s most noticeable in housing,\u201d B\u0142asik complains. A reality common to the rest of Europe<\/a> \u2014 and the West \u2014 that here is turbocharged by sky-high interest rates. He is clear, however, that he will vote no on EU entry. The euro, he says, would not be a panacea either.<\/p>\n

Jon Steinsson, a professor at the University of California, Berkeley and one of the most respected economists on Iceland, disagrees. \u201cOne of the benefits of joining the EU is that trade barriers would be reduced and competition would increase. That would help lower prices,\u201d he writes by email. \u201cThe possibility of joining the euro, furthermore, would allow interest rates to be reduced [they have just risen to 8%, versus 2.25% in the euro area], making life cheaper. That would be an important benefit,\u201d he argues. On August 29, Icelanders will also put their wallets on the line at the ballot box.<\/p>\n

Sign up for our weekly newsletter<\/a> to get more English-language news coverage from EL PA\u00cdS USA Edition<\/p>\n","protected":false},"excerpt":{"rendered":"Six small tomatoes, 980 krona, almost \u20ac7 (around $8.15) at the current exchange rate. A hamburger at a…\n","protected":false},"author":2,"featured_media":603932,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,1813,61,60,192558],"class_list":["post-603931","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-europe","tag-ie","tag-ireland","tag-reykjavik"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/603931","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=603931"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/603931\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/603932"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=603931"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=603931"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=603931"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}