Iceland’s February Inflation Rate Rises as Seasonal Sales End

Iceland’s inflation jumped as the end of seasonal sales pushed prices up, increasing pressure on the island’s central bank to raise interest rates.

Inflation accelerated at an annual 4.8 percent in February, up from 4.2 percent in January, Reykjavik-based Statistics Iceland said today on its website. Consumer prices rose 1.6 percent in the month, the agency said.

The central bank this month kept its benchmark rate at 6 percent as policy makers try to support the krona while they scale back currency restrictions. The bank, which targets 2.5 percent inflation, forecasts that price growth will average 3.6 this year and slow to 2.7 percent in 2014.

Iceland imposed currency restrictions in 2008 following the failure of Kaupthing Bank hf, Glitnir Bank hf and Landsbanki Islands hf after the krona sank 80 percent against the euro offshore. Arion Bank hf, the state-created successor to Kaupthing, has estimated the controls are stopping as much as $8 billion in offshore krona assets from being sold.

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