Inflation is a general rise in prices over time. If inflation is 5%, a basket of goods that cost ISK 100,000 a year ago now costs ISK 105,000. Each króna buys less than before, and money sitting at low interest rates loses value. Central banks that issue fiat currenciesFiat currencyGovernment-issued money whose value rests on law and trust rather than gold, like the Icelandic króna. try to keep inflation low and stable.
How is inflation measured?
In Iceland, Statistics Iceland (Hagstofa Íslands) measures inflation with the consumer price index (vísitala neysluverðs). The index tracks the prices of goods and services that households buy, such as food, housing and fuel. Inflation is usually given as the rise in the index over the last twelve months.
Since 27 March 2001, the Central Bank of Iceland has aimed to keep inflation as close as possible to 2.5% a year on average. Its main tool for this is its policy interest rate. Even 2.5% inflation doubles prices in about 28 years.
Inflation in Iceland, and crypto
Icelanders know inflation well. In the 1970s and 1980s it was often tens of per cent a year. In 1981, two zeros were removed from the króna, so 100 old krónur became one new króna. After the banking collapse, inflation reached 18.6% in January 2009. Index-linked loans (verðtryggð lán), which follow the consumer price index, are a legacy of this history.
Inflation is one reason many people see BitcoinBitcoinThe first and largest cryptocurrency: a digital currency that no single party controls, with a fixed limit of 21 million coins. as a store of valueStore of valueAn asset that keeps its purchasing power over a long time, so it can be saved now and used later, as gold has done for centuries.. Bitcoin's maximum supplyMaximum supplyThe largest number of units of a cryptocurrency that can ever exist under its rules, such as 21 million for bitcoin. is 21 million, and nobody can increase it, unlike the króna. The price of bitcoin swings far more than consumer prices, though, so a fixed supply doesn't protect you from price falls.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.