'We Cannot Afford to Give Up' on Tackling Inflation, Says Confederation of Icelandic Industries

Iceland is experiencing its highest inflation rate in two years, with the 12-month figure reaching 5.6%. This marks a slight increase from the previous month's 5.3% and is significantly higher than the 3.8% recorded a year ago.

Bjarni Benediktsson, Director of the Confederation of Icelandic Industries, voiced disappointment, noting that domestic factors, including public sector price hikes, have exacerbated the issue. While acknowledging external influences like global conflicts, he emphasized the critical need for domestic policies not to worsen the problem.

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We are now seeing how costly it can be to have high inflation over a longer period.

Benediktsson highlighted the prolonged period of high inflation and interest rates, which are beginning to impact the economy through rising unemployment and slower activity, particularly in the construction sector. He stressed that the focus must be on actions that increase the likelihood of reducing inflation and subsequently lowering interest rates.

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It would be disastrous to take actions now that do not help lower inflation.

"We are now seeing how costly it can be to have high inflation over a longer period," Benediktsson stated. "What the Confederation of Icelandic Industries emphasizes is that possible responses to this situation should aim to increase the chances of lower inflation and, consequently, a lower interest rate level. It would be disastrous to take actions now that do not help lower inflation."

He concluded by underscoring the urgency of the situation, stating, "The conversation must now revolve around what we can do, because we cannot afford to give up on the task."

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The conversation must now revolve around what we can do, because we cannot afford to give up on the task.