The annual inflation rate in Iceland eased to 3.8% in August 2025 from 4.0% in the previous month, marking a three-month low. The slowdown was largely driven by softer price gains in housing and utilities (6.4% vs 7.1%), transport (1.2% vs 2.5%), clothing and footwear (1.8% vs 2.9%), communications (2.0% vs 2.5%), recreation and culture (2.6% vs 2.9%), and miscellaneous goods and services (4.2% vs 4.6%). Conversely, prices accelerated in food and non-alcoholic beverages (5.5% vs 5.0%) and health (2.7% vs 2.5%), along with a rebound in educational services (2.2% vs -12.3%), and a slower decline in furnishings and household equipment (-0.7% vs -0.9%). On a monthly basis, consumer prices edged up 0.2% in August, following a 0.3% growth in July.