Monthly expenses gone up by 80,000 ISK

22.06.2022 - 12:43
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 Mynd: RÚV - Kári Gylfason
The price increases Iceland is currently experiencing are very significant for a large group of people, says an Íslandsbanki economist. The average monthly expenses of a family of four have increased by 80,000 krónur in one year. Food, fuel and interest on non-indexed mortgages have risen sharply over the past year. Further price increases are predicted. 

RÚV News has been extensively covering price increases in fuel, food and mortgages and has asked the National Confederation of Labour (Alþýðusamband Íslands) and Íslandsbanki to calculate the increased expenses. 

The calculation is based on the example of a family with two children. 

In May last year, the example family spent 118,000 ISK on groceries. As of today, the amount is 126,000 ISK. A year ago, fuel for a family with two cars cost 19,000 ISK per month, and now it costs 27,000 ISK. The monthly instalment of a non-indexed mortgage of 40 million was 121,667 ISK a year ago; this year, it is 188,333 ISK. According to calculations, monthly expenses have increased by almost 82,000 ISK over the year. 

Indexed mortgages have increased by 3 million

Prices and fees for municipal and public services have also increased. Rental housing prices went up, but not as drastically as indexed mortgages. The instalments on indexed mortgages of 40 million have not increased too much, but their capital amount has risen by about 3 million since last May. 

Íslandsbanki predicts further price and interest rate increases. "We anticipate that inflation will continue to rise, and this trend will continue over the coming months," - says Björn Gunnarsson, head of the bank's Analysis Department. 

"A painful reality for many"

It can therefore be expected that some households will not be able to cope with the mortgage payments. "Of course, the situation carries such a risk, so this is a painful reality for many. We will all be affected by the fact that the cost of living will be higher," - says Björn. 

He encourages all debtors to consider their income and seek advice. "You may have to postpone a trip abroad until next year. Christmas expenses will be higher; everything will cost us more," he adds.   

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