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Hitt og þetta 12. júlí 2006

(IFN) Icelands inflation accelerates to 8.4% on year

Reykjavik (IFN) Iceland's consumer prices continued to rise rapidly in July, according to data from Statistics Iceland Wednesday.

July's consumer price index rose 0.46% from June and 8.4% from last year.

This marks an acceleration from June's 8% yearly rate. Local analysts expected the yearly inflation rate to rise to 8.6%.

On the month, prices on fuels rose 3.5%, while groceries rose 1.3%. Owner-occupied housing costs increased 1.5%.

However, retail discounts in early summer caused prices on clothing and footwear to fall 9.6%.

On the year, prices rose strongly in all groups, due largely to a sharp depreciation in the local currency this year.

Imports became 6.5% more expensive than last year, groceries 12.2%, and domestic goods cost 9.7% more.

Iceland's inflation rate remains far above the 2.5% level targeted by the central bank.

The central bank recently said it found inflation "unacceptable" and said it would continue its present cycle of aggressive rate hikes as long as inflation expectations weren't subdued.

Most analysts expect a further 50 to 75 basis point rate increase in August to bring the key policy rate to 13.75%.

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Icelandic Financial News (IFN) is available on Factiva, a joint venture between Reuters and Dow Jones Newswires, FT.COM, LexisNexis, Comtex, Gale and Thomson via the Nordic Business Report.