REYKJAVIK (AFP) – The hot springs of Iceland are not the only thing making tourists sweat, as a look at the hotel or lunch bill will tell you that most things cost more, sometimes much more, than anywhere else in Europe.
On the subarctic island, consumer prices were on average 56 per cent higher than the rest of Europe in 2018, making Iceland the single most expensive country, ahead of Switzerland (52 per cent), Norway (48 per cent) and Denmark (38 per cent), according to Eurostat data.
In order to avoid unpleasant surprises, Quint Johnson, had done “some research”, before travelling to Iceland from the United States (US) for a week’s vacation with his family.
“But it’s been a little bit of a shock,” the 22-year-old student told AFP, having discovered the chilling rates for familiar items like a simple hamburger with fries.
A glance at the menu at an Icelandic restaurant will tell you that a plain cheese pizza will run you almost EUR17.
“That’s a big price jump compared to what I’m used to,” Johnson said.
According to the consumer price comparison site Numbeo, a dinner for two in an average restaurant ends with a bill of about EUR85 and a dozen eggs cost up to EUR5. A small population of 355,000 coupled with a high dependence on imported goods and high taxes on alcohol all help explain Iceland’s steep prices.
“Iceland is so small. So it’s very difficult to get the same economies of scale as you have with companies in countries that are 100 times larger,” said Chief Economist at the Iceland Chamber of Commerce Konrad Gudjonsson.
Regulation also plays a part and imported products based on things like raw eggs or unpasteurised milk face significant customs barriers.
Large fluctuations in the Icelandic krona in 2016-2017 have also led to a general price increase. Gudjonsson pointed out that there is also a “strong link between how expensive countries are and the standard of living”, and Icelanders on average do well for themselves.
In 2018, the median monthly wage for someone working full-time was about EUR4,450, according to Statistics Iceland.
So while the cost of living can come as a shock to tourists, the locals have the salaries to match it.
“We have to take into account the level of wages in Iceland. Here, we have one of the highest wages on average in Europe,” said Chairman of the Consumers’ Association of Iceland Breki Karlsson.