Iceland’s Inflation Unexpectedly Jumps to 16-Month High

Iceland’s inflation surprised by accelerating to its fastest pace in more than a year, likely raising concerns for the policymakers about the pace of further easing of the highest borrowing costs in western Europe.

The consumer price index in the island economy rose 5.2% on year this month — the highest level since September 2024 — driven mainly by the costs of housing, according to a statement from Iceland’s statistics agency on Thursday. Lender Islandsbanki hf had projected the rate to rise to 4.9%, while its rival Landsbankinn hf had forecast a 5.1% gain.