The annual rate of inflation in Iceland has dropped to 8.6 percent in November, compared to 9.7 percent in October. This is the lowest it has been since autumn 2007; but still a long way from the Central Bank of Iceland’s targeted 2.5 percent.

Press release from Statistics Iceland: The CPI based on prices in November 2009 is 356.2 points (May 1988=100), 0.74% higher than in the previous month. The CPI less housing cost is 335.7 points, 0.96% higher than in October.

Prices of clothing and footwear rose by 3.4% (effect on the index 0.20%) and prices of petrol and diesel oil by 3.5% (0.17%). Prices of furnitures and furnishings increased by 4.2% (0.14%) and of groceries by 0.6% (0.10%) Airfares for international flights fell by 14.5% (-0.14%).

The CPI in November 2009 is 8.6% higher than in November 2008 while the CPI less housing cost is 12.5% higher than one year ago. Over the last three months, the CPI has increased by 2.7%, equivalent to an annual inflation rate of 11.2% (12.3% for the CPI less housing cost).

The CPI compiled in the middle of November 2009, 356.2 points, is applicable for indexation purposes in January 2010. The old credit terms index for January 2010 is 7,033 points.