Financial and Mortgage Portfolio Overview
Inflation to spike in autumn 2022
House prices and import costs the main drivers short-term but wage costs also matter
Highlights
Inflation and the CBI inflation target
%
Inflation by contribution of main categories
%
Inflation started rising in mid-2020,
in the wake of the COVID-19 Crisis
and the depreciation of the ISK
Rising import costs due to
10
pandemic-related supply/demand
imbalances and, more recently, the
Ukraine war have been partly offset
9
9%
by ISK appreciation
8
Rapid house price increases play an
7%
outsized role in recent inflation
7
increase due to inclusion in SI
inflation measurement
6
CO
In June inflation reached a 13 year
peak of 8.8%
5%
5
Inflation has proven more persistent
than expected, but ultimately it will
fall
4
3%
3
ÍSB Research expects inflation to
average 8.1% in 2022, 6.4% in
2
2023, and 4.1% in 2024
1%
The forecast assumes that the ISK
will appreciate in coming quarters.
On the other hand, inflationary
pressures from wages and/or house
prices could turn out stronger than
anticipated
Furthermore, imported inflation
could turn out higher if price hikes
abroad continue unabated
1
-1%
0
2016 2017
2018
2019 2020
2021
2022
Jan-19
2023
2024
Jul-19
Other services
Jan-20
Jul-20
Jan-21
Jul-21
Public services
Inflation
Inflation target
Fuel
Imported goods
CPI
Jan-22
Housing
Domestic goods
Sources: Statistics Iceland, ÍSB Research.
46
August-September 2022View entire presentation