What’s wrong with prices in Iceland? Part 2

30 April 2019
In Iceland, people get higher wages for jobs considered low-income in other countries…

We continue explaining the reasons of high costs in Iceland, so if you were not demotivated after reading the first part, here are two more major causes of this destination being not very suitable for a budget vacation.

 

High standards

High standards Iceland, port

Although geography and politics do play a significant role in the country’s economic situation, it is Iceland’s high quality of life, or living standards, that are the major factor of its shocking prices. Here, average pretax earnings are about $60.000 while in the USA this number is about $48.000. In Iceland, people get higher wages for jobs considered low-income in other countries, making the average local monthly minimum around $2.500/month, and this is a relatively big number. Therefore, a higher material wellbeing affects costs of goods.

 

Law of demand

Law of demand Iceland, north shine

There is one more external factor influencing Iceland’s unwelcoming prices. It’s demand among tourists and travellers has grown fivefold during the last nine years! And when an increasing number of people compete for a limited supply of goods, those goods’ prices continue rising. Nobody canceled the basic economic law of supply and demand.

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