Cost of living in Iceland

Maybe you could Iceland but do you know the cost of living in Iceland? Is Iceland expensive? I’m sure that it is not cheap. In fact, until 2019, Iceland ranks as the second most expensive country to live in globally. And how expensive in Iceland? The costs of living in Iceland are higher than in all countries within the EU.

According to Iceland Magazine, “consumer prices in Iceland are on average 66 per cent higher than in Europe,” with costs in the land of fire and ice outpacing famously expensive countries such as Switzerland, Norway, and Denmark. What’s more expensive? Food, clothing, fuel, personal care items, furniture. These things can easily be two to three times as expensive as US prices. 

Why is Iceland expensive? There’s no single explanation. It’s a combination of politics, economics, and geography. Since Iceland nearly tickles the Arctic Circle, its climate is not conducive to farming. There are few native crops and the growing season is short. The rest of the food was imported. The same goes for most other goods. 

An example of a budget in one day in Iceland

The cost of importing those products – usually from the UK, Germany, the U.S., and Norway – gets passed on to the consumer. In Iceland, imported sweets and alcohol are slapped with an extra cargo fee and all wheat products are subject to a relatively high tariff. So prepare to shell out for that bread.

Taxes also add to the cost. Like most countries, Iceland has a value-added tax or VAT. The VAT for goods in Iceland is 24 per cent, while the VAT for foodstuffs is taxed at a discounted rate of 11 per cent. For Americans, these tax rates are very high. Most states don’t even charge a sales tax on food at all. All those things make the cost of living in Iceland expensive.

Iceland hotel cost is not cheap, too. On average, 3-star hotel costs about 100 to 150 USD for a room of one or two adults. With similar room types, the 4-star hotel could cost up to 300 USD or more for luxury hotels. If you want to rent a cheap room, Airbnb is a good option and a private, double room generally starts at roughly 65 USD/night. 

Hotel Katla in Iceland

The average cost of a trip to Iceland is about 60 – 75 USD per day. That budget includes using local transportation, staying in an Airbnb, a hostel, taking limited tours and limiting your drinking. If you have more money, you could eat out, drink more, take more organized tours or paid activities.

Remember that restaurant meals are really expensive and alcohol is not cheap. So most of the money should be spent on food and accommodation and limit your drinking.

And a new question is asked: “How much is a beer in Iceland?” One of the things that shock foreign visitors to Iceland is the price of alcohol: It is expensive to drink in Iceland! Cost of beer in Iceland is about 1,200 ISK (9.5 USD or 8.6 EUR) per half a litre of draught beer. 

There is a simple explanation for the high prices: Taxes. Alcohol taxes are levied by alcohol volume and alcohol is one of the things which is taxed most heavily in Iceland. How to save your money for drinking? Don’t drink much, and if you want to drink, be sure to buy enough beer at the duty-free at the airport and carry with you. It will save 30% off the cost of buying alcohol in Iceland.

And how is living in Iceland? Iceland is a singularity place.  There is really no place like it. It is a volcanic island in the North Atlantic located just below the Arctic Circle. Iceland has one of cleanest nature in the world. And Iceland is a land of epic views with its largely treeless landscapes, clean air and mountainous highlands.

According to the 2018 Global Peace Index (GPI), Iceland is the most peaceful nation in the world. Iceland has no standing army and very few armed police offers. Everyone here is progressive and peace-loving. And it is in a peaceful part of the world with no unstable nations nearby.

Honestly, Iceland is an attractive destination for every foreigner tourists except it is too expensive.

Read more about the travel guidance at DivertLife

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