The Consumer Price Index (CPI) measures inflation as experienced by Faroese households in their daily living expenses. The latest CPI figures are from February 2023.
Higher prices across all main categories
that each category has on the overall price index is weighted according to consumption levels.
Although inflation appears to be slowing down – and we need to go back to May 2022 to see a lower annual inflation rate – prices continue to go up across all 12 main categories.
Grocery prices up by more than 13%
Food and non-alcoholic drinks make up the largest portion of the average Faroese household spending. This category saw a price increase of 13.3% in the past year.
Within the food category, butter, margarine and cooking oil have seen the highest price hikes, going up by almost 27% in the past year. The price of bread and cereals continues to rise. Rice and pasta have seen the highest price hikes since the last CPI report. Vegetables are 16% more expensive than a year ago, while coffee, tea and cocoa prices have gone up by more than 20%.
Prices have gone up across all food categories in the past year. Prices of sugar and candy have gone up by 7% and soft drinks by 6%, which is significantly less than other food categories. Relatively speaking, sweets and soft drinks are now cheaper than other grocery products.
Interest expenses and energy prices affect CPI the most
The numerous interest rate hikes introduced in the past year have had the greatest overall impact on the latest CPI. Electricity prices have also gone up considerably. Households now spend 15% more on goods and services in the ‘housing’ category than this time last year.
In previous CPI reports where the inflation was higher than it is now, the price of fuels for household heating has had the greatest effect on the figure in the ‘housing’ category. The annual CPI changes continue to be affected by the substantial price hikes for oil which started in 2021.
Inflation rate similar to other Nordic countries
In February, Denmark had an annual inflation rate of 7.6%, which is slightly below the Faroese rate. Norway’ inflation rate of 6.3% is among the lowest in Europe. Sweden and Iceland have higher rates, at 12% and 10.2%, respectively. The EU average inflation rate stands at 9.9%. Note that the EU inflation rate is based on the HICP index (the Harmonised Indices of Consumer Prices), which means that rental prices are not included.