Iceland has the highest cost of living in the world.

People walk past a mural outside a shop in Reykjavik, Iceland, on September 3, 2020. Photo: Reuters.

Iceland has just overtaken Switzerland to become the world's most expensive country to live in, according to newly released calculations by the Viska trade union based on data from the Eurostat statistics agency and the Central Bank of Iceland.

Economist Vilhjalmur Hilmarsson of Viska stated that the cost of living in Iceland is now about 3% higher than in Switzerland. This marks the first time in many years that Iceland has reclaimed the top spot for the most expensive country. Previously, according to Eurostat, the last time the island nation surpassed Switzerland was in 2018.

According to Bloomberg, the shift clearly reflects the pressures facing the small North Atlantic economy.

Following the pandemic, tourism has rebounded strongly, becoming Iceland's biggest growth driver. However, along with the rapid increase in visitors comes a widespread price surge that the country's central bank is still struggling to control.

"Tourism contributes significantly to inflation in the service sector. Demand pressure from tourism has driven wages up," Hilmarsson said.

The number of tourists has far exceeded Iceland's population, which is just under 375,000. Photo: Responsible Travel.

He added that another important factor is housing, which is directly affected by tourism. Tourists are competing with locals for accommodation through short-term rental platforms like Airbnb.

High costs are now clearly evident in daily life. Data from the federation shows that food prices in Iceland are 44% higher than the average in the Nordic countries. Specifically, milk and eggs are about 75% more expensive, while meat is 71% more expensive.

A glass of beer in Iceland can cost up to 1,800 kronur (approximately $14.60 USD ). A latte at a cafe also costs around 1,000 kronur. For tourists, these seemingly small expenses can quickly become a significant part of their travel budget.

A recent survey by the national tourism board shows that rising prices are beginning to cause some tourists to reconsider their plans to visit Iceland.

According to experts, the problem lies in the economic structure, which relies heavily on labor-intensive industries while the capacity for expanding production remains limited. When tourism experiences rapid growth, price pressures are more likely to spread to other sectors.

Source: https://znews.vn/iceland-co-muc-sinh-hoat-dat-do-nhat-the-gioi-post1655739.html