Iceland has become the most expensive country in the world, overtaking Switzerland in terms of prices

Iceland has once again become the most expensive country in the world, overtaking Switzerland in terms of prices. Iceland last topped this ranking in 2018.

This is evidenced by calculations by the local trade union Viska based on data from Eurostat and the Central Bank of Iceland, Bloomberg writes.

The current price level in Iceland is already three percentage points higher than in Switzerland.

One of the main reasons for the price increase is the rapid recovery of tourism after the pandemic. The tourism sector has become a key driver of economic growth in countries, but at the same time has pushed prices up, noted economist Vilhjalmur Gilmarsson.

The increase in demand from tourists, according to Gilmarsson, has increased inflationary pressures in the services sector, contributed to higher wages and affected the housing market.

In particular, the rise in rental prices is associated with short-term rental of housing through platforms like Airbnb: tourists are increasingly competing with locals for apartments.

However, high prices are already starting to affect the tourism industry. According to the Icelandic Tourist Board, more and more travelers are postponing their trips due to high prices.

Economists also warn that overreliance on tourism makes the country vulnerable to inflation and economic fluctuations, and that Iceland needs to develop other sectors to reduce price pressures.

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