The annual inflation rate in Iceland inched down to 3.7% in November 2025 from 4.3% in the previous month, marking the lowest reading since December 2020. Prices moderated for alcoholic beverages and tobacco (5.4% vs 5.8% in October), housing, water, electricity, gas and other fuels (6.5% vs 7.1%), communications (0.7% vs 0.8%), recreation and culture (2.3% vs 3.4%), and miscellaneous goods and services (3.5% vs 4.2%). In addition, costs declined for clothing and footwear (-2.3% vs 0.2%), furnishings and household equipment (-1.2% vs 1.3%) and transport (-0.1% vs 0.8%). Conversely, prices accelerated for food and non-alcoholic beverages (6% vs 5.8%), health (3.7% vs 3%), and hotels, caf