Price increases on diesel and petrol of 18.1 and 16.1 percent respectively at an annual rate drove the development. Added to this is a VAT increase on petrol and diesel from 11 to 24 percent after a temporary fiscal support measure was phased out at the beginning of September.
The Icelandic central bank, Sedlabanki, raised its key interest rate to 8 percent in August. The next interest rate announcement from Sedlabanki is due on October 7. And on October 8, a deadline expires to terminate several collective agreements in the Icelandic labor market, citing high inflationary pressures.
