Chapter 02 of 13

Suspect 2: Global supply shocks

The go-to excuse during the pandemic was broken supply chains. In 2021 and 2022, this explanation made perfect sense. Shipping containers cost ten times their normal rate, factories were stalled, and global logistics were a mess.

But that excuse no longer works for 2025 and 2026. Global shipping has been back to normal for years.

Iceland's own inflation data proves this. The components of the CPI that actually depend on global supply chains are not the ones driving the crisis. Imported goods are currently deflating at −1.2%. Transport costs are up (+5.4%), but the hottest part of that increase comes from domestic fuel taxes, not world market prices.

If Iceland's inflation was still a global supply-chain story, it would have cooled off when the global shipping crisis ended. It didn't. Suspect 2 has a solid alibi for the current period.