Iceland inflation could trigger review of collective agreement

The union's warning of a review comes after inflation rose to 5.6 percent, according to fresh figures released on Thursday. That is the highest level in two years. Behind the price increases are rapidly rising costs for housing, food and transportation.

Termination of the collective agreement can be made no later than October 8 if inflation is above 4.7 percent.

Inflation in Iceland has been above the central bank Sedlabanki's inflation target of 2.5 percent since the outbreak of the pandemic in 2020, and the central bank has raised the key interest rate three times this year to 8.00 percent to dampen demand.