IMF concerned over Iceland’s inflation metrics

Iceland’s chosen inflation reference may not be an accurate representation of actual inflation in the real economy, an International Monetary Fund report explains.

In 2017, the inclusion of house prices in Iceland’s inflation index allowed inflation to hover around 2.5%, close to the desired inflation target of 2.5%. However, excluding house prices, inflation would fall to –3%, nearly a 60-year low.

The IMF warns including house prices can increase the sensitivity of the metric, in addition to

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