Iceland’s rate of inflation increased 1.38 percent in June, meaning a rate of 12.2 percent inflation in the last 12 months (16.7 percent when housing costs are excluded).

This rate of inflation is higher than the banks predicted, with NBI (Landsbanki) predicting 1.2 percent and Islandsbanki just 0.9 percent. Read the full story

The CPI based on prices in April 2009 is 336.0 points (May 1988=100), 0.45% higher than in the previous month. The CPI less housing cost is 311.6 points, 0.84% higher than in March.

Prices of petrol and diesel oil rose by 8.2% (effect on the index 0.33%) and prices of clothing and footwear increased by 3.2% (0.19%). Read the full story

The expected rapid decrease in Iceland’s high rate of consumer price inflation appears to be continuing.

After peaking in January at a year-on-year rate of 18.6 percent, it reduced to 17.6 percent in February and 15.2 percent this month. Read the full story

Iceland’s fearsome inflation rate has begun to ease, according to preliminary February figures released yesterday.

Reuters reports that the CPI reduced to an annual 17.6 percent over the month from a peak of 18.6 percent in January. Read the full story

Statistics Iceland reports that the monthly wage index in January 2009 increased by 0.6 percent to 355.7 points. That figure is around 7.5 percent over the previous 12 months.

The January increase means that ‘real wages’ stayed the same in that month, but have fallen 9.4 percent in the last year as a whole. Real wages are an assessment of spending power where the effect of inflation is subtracted from the numerical significance of wage increases. Read the full story

Over the last 12 months the cost of living in Iceland has increased by 18.1 percent, and the inflation rate excluding housing stands at 20.7 percent. Over the last three months, costs have risen by 5.5 percent, which would equate to an annual inflation rate of 24 percent. Read the full story

Geir H. Haarde, the Icelandic Prime Minister, said that hope was rekindled yesterday when the Icelandic krona was traded on the international market for the first time since the banking collapse in early October, according to MBL.is. Read the full story

The Central Bank of Iceland has announced that the key interest rate will increase by 6% to 18%. The bank recently lowered the rate by 3.5% from 15.5% to 12%. In a press release the bank said that the reasons for the decision would be made public at 11am today.

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The Icelandic Central Bank’s forecasts of an upcoming “equilibrium” look a step closer, partly due to the weak Icelandic krona forcing down consumer spending and partly because of increased exports – largely of aluminium.

The country’s rampant consumer debt and high inflation are set to ease as the balance of trade shifts further in favour of exports as Icelanders reign in spending.

Bloomberg reports that exports leaped an annual 25 percent in the second quarter while imports fell 12 percent on lower investment and Read the full story

Iceland may have help from regional sources should a serious financial crisis crash their system. According to Kauppalehti, a Finnish financial news source, the Bank of Finland may be in a position to assist Icelandic banks should they continue to face difficulties.

According to Finnish reports, banks in the Nordic region agreed long ago to cooperate regionally in order to maintain local financial stability. Banks which operate in at least two Nordic countries could, according to this agreement, expect to be bailed out in case of troubles.

If the reports are true, Glitnir, Kaupthing and Landsbanki, which all have operations in Finland, may be in a position for future assistance.

Sweden’s Riksbank announced earlier this week, however, that the Nordic banks have no such agreement, according to reports on Bloomberg.com. That website reports that the Riksbank rejected the idea that they would assist Iceland’s banks in a financial crisis situation.

Mattias Persson, the head of the financial stability department at the Riksbank gave an interview on the subject on Thursday. He said that there was a memorandum of understanding between the Nordic central banks, however it “exists to allow the sharing of information, not to provide any lending facility,” he said.

“I don’t think anybody ever really thought they would step in and help, nor do I think that that’s where we’re going,” said Ludvik Eliasson, an economist at Landsbanki. “The problem is more that the central bank can only provide liquidity in krónur whereas the commercial banks need liquidity mostly in other currencies, which is a very unusual situation.”

Iceland’s central bank has yet to comment on the issue.