RE: Drop in prices?

My Danish rellies went to Iceland a couple of years ago- they took most of their own food and booze with them because of the cost.........

Just remember wonderful Iceland to be one of the most expensive countries

There should be a drop in prices due to horrific economy crisis in Iceland.

How much does it mean? Can some people give an idea, preferably using examples like before coffee cost..., now it costs... Or before the room in Hotel Borg cost..., now it costs..., before a rental car at cost..., now it costs...

Thank you very much

It's now not that more expensive than Denmark or Norway.

You have to remember that most of everything is imported in Iceland.
If the Króna is low, the prices goes up on imported goods.

At the minutes prices haven't changed much because the central bank has fixed the rate of the Króna but when it will be floating again, prices will be soaring.

Couple of weeks ago, the TV news reported prices went up by 80% on some detergent and some breakfast cereals since March 2008.

Iceland was very expensive before, it is now expensive but it become again very expensive.

I see. I must admit, I put a logical mistake in my initial post. I included the dropping exchange rate of the Krone versus the Euro. And I wasn't aware, that Iceland put the Krone on hold. But is it really still put on hold?

So, considering the weakness of the Krone, it should be much cheaper now (hotels, food, car, travelling as a whole), or am I still wrong? And there I would like to have real prices in comparison.

Note that the primary products of Iceland is electricity (=aluminium), fish and "services"(like all other developed countries). Tthe only of these that a tourist consumes is services. Since prices (on all imported goods = everything) rise terribly for the inhabitants they will do what they can to sell the "services for tourists" = hotels, restaurants, tours etc. at the usual prices (in foreign currency) so that THEY can keep their living standard!

"All" the rest is imported and will stay at fixed prices counted in foreign currency!

Why not check out the hotels homepages!!

Not being particulary interested myself, I just stumbled over this thread.
In a travel programme that I saw on Swedish tv, Iceland was said to be the cheapest among the Scandinavian countries at the moment, and Reykyavik the cheapest of the capitals. That's for visitors.
I know that it doesn't make much sense in terms of one country's economy, as Iceland has to rely to great degree on imports. It's obvious that it's going to last only as long as the exchange rate of the Icelandic Krona is kept on a fixed level.

I would say your hunch is correct, many things are less expensive now than they used to be, for foreigners. The ISK has depreciated against the Euro by 90% since January! (www.sedlabanki.is)

So, although it's correct we are seeing high inflation here and it is kicking in with e.g. many food products going up in price in the last few months, the inflation hasn't been as high as the drop in the currency. So many things are better value for tourists. Especially things like meals at restaurants, bar drinks, and shopping - clothes, Icelandic design....(perhaps less things like tours, accommodation etc which is often priced in euros). In fact, Iceland has seen an increase in the number of tourists in the last few weeks and a large increase in tax refunds - and well, you wonder why?!! Obviously this is because of the economic situation. I have also heard it first hand from foreigners who have been to Iceland before, that they find it quite a lot cheaper now.

What is likely to happen soon is the ISK will float and depreciate even more, so many things will be even cheaper for foreigners, but it follows that inflation will then be high and prices will probably go up quite steeply. It's impossible to predict really what's going to happen, but right now at least it is certainly less expensive for foreigners to visit Iceland.

Examples of prices:
Cup coffee (350 ISK): was 4 euros now 2
Beer (700 - has gone up by around 100 ISK this year): was 8 euros now 4

Thanks for explaining and the examples. 2 instead of 4 € for coffee and 4 instead of 8 for beer, that's a real drop.

I was just there, albeit for a short business trip, and was looking for a thread like this to comment on. I was told by various people that ISK inflation hasn't kicked in that much. So if you're a USD based traveller, costs have gone down 60% in the last year. Some examples of prices:

Airport bus one way and RT: ISK 1500 and 2700
2 nights at Apartment K: 11,000
Taxi flag fall: 500
Cafe latte: 380
Nice lunch at the Icelandic Fish Market (which despite its name is an upscale fusion restaurant): 5500
Internet: 200/hr at the library
Postcards: 60-100
International postcard postage: 120
Wool jacket from 66 North: 35,000
Souvenir T-shirts: 2000-3000

What stood out for me as good deals were accomodations. I booked through booking.com and they showed all prices in ISK not in foreign currency. Apartment K is highly recommended. A whole slew of decent options were available for the USD 100 range. But when I checked prices about 2 weeks apart on booking.com, they had already risen noticeably. Since the main cost components for lodging are rent, labor and utilities, local and not imported inputs, it makes sense that these rise a lot less faster, whereas imported goods will be hit immediately by the decline in the ISK.

I spoke with two people in depth about the effects of the crisis on their bottom line. One was the owner of Apartment K and the other was my supplier. They both said it has been a boon for them. Which makes sense. Tourism and exports are the two major sectors of the economy that grow when currencies depreciate and they provide the engine for future growth. It was this way in Argentina since 2001 and likely the same for Iceland.

The exchange rate available at banks was ISK 146 = USD 1. Now keep in mind that currency controls are now in place in Iceland. So this rate is set by the government and there are limits on how much foreig currency Icelanders can buy. Consequently there is now a nascent black market in Iceland, which is advertised through newspaper classifieds and others. I did not delve into the details nor the rates but I imagine that travellers should be able to access these markets.

Very informative. How is it to understand that blackmarket is advertised through newspapers?

omoomo,
It is the venue through which people with foreign currency sell them. For example, today's ISK rate is 120 to the dollar. Someone with excess USD just back from a foreign trip may offer, say $1000 for ISK 130,000, through a classified, be it on paper or online. This is what my supplier told me. Iceland being a small place with relatively little cash in the economy, it's probably small enough that there aren't active street markets.