Producer Price Index YoY for Iceland: November 2025 Release and Macroeconomic Implications
The November 2025 Producer Price Index (PPI) YoY for Iceland registered a 3.00% increase, slightly below expectations and last month’s 3.10%. This marks a stabilization after volatile swings earlier in the year, with notable easing from the 9.50% peak in March. The data signals moderate inflationary pressures in upstream sectors, influencing monetary policy and financial markets amid ongoing geopolitical risks and fiscal adjustments.
Table of Contents
The Producer Price Index (PPI) YoY for Iceland (IS) in November 2025 rose 3.00%, according to the latest release from the Sigmanomics database. This figure came in below the consensus estimate of 2.10% and slightly under last month’s 3.10%. The PPI measures the average change over time in selling prices received by domestic producers for their output, serving as a leading indicator for consumer inflation trends.
Drivers this month
- Energy prices contributed approximately 0.80 percentage points (pp) to the PPI increase, reflecting modest recovery in global oil markets.
- Manufacturing sectors added 1.20 pp, driven by higher input costs for metals and chemicals.
- Food processing showed a minor 0.30 pp rise, stabilizing after volatile harvest season impacts.
Policy pulse
The 3.00% PPI reading remains above the Central Bank of Iceland’s inflation target of 2%, signaling persistent upstream price pressures. This supports the bank’s cautious stance on monetary tightening, with the policy rate currently at 5.50%. The data suggests inflation risks remain skewed to the upside, though the pace of increase has moderated significantly since early 2025.
Market lens
Following the release, the Icelandic króna (ISK) depreciated slightly against the USD and EUR, reflecting market concerns over sustained inflation. Short-term government bond yields rose by 5 basis points, while breakeven inflation rates edged up 0.10 pp, indicating modestly higher inflation expectations.
The PPI’s trajectory over the past year reveals significant volatility. Early 2025 saw a peak at 9.50% YoY in March, driven by supply chain disruptions and energy price spikes. Since then, the index has steadily declined, hitting a low of -0.60% in August before rebounding to the current 3.00%. The 12-month average PPI stands at approximately 4.30%, underscoring the recent moderation.
Monetary Policy & Financial Conditions
The Central Bank of Iceland has maintained a hawkish tone throughout 2025, raising rates from 3.00% in January to 5.50% by November. The persistent PPI inflation supports this stance, as upstream price pressures often translate into consumer inflation with a lag. Financial conditions have tightened, with ISK liquidity constrained and credit growth slowing to 2.10% YoY.
Fiscal Policy & Government Budget
Iceland’s government budget remains moderately expansionary, with a deficit target of 2.50% of GDP for 2025. Increased public spending on infrastructure and social programs has added demand-side inflationary pressures. However, fiscal discipline is expected to tighten in 2026 to counterbalance inflation risks.
Drivers this month
- Energy sector prices rose 2.50% MoM, contributing 0.80 pp to the YoY PPI.
- Manufacturing input costs increased 1.80% MoM, adding 1.20 pp.
- Food processing prices stabilized, contributing 0.30 pp.
Policy pulse
The PPI remains above the Central Bank’s 2% inflation target, reinforcing expectations for continued monetary tightening. The data supports a cautious approach, balancing inflation control with growth concerns.
Market lens
Immediate reaction: The ISK weakened 0.30% against the USD within the first hour post-release. Short-term bond yields rose 5 basis points, reflecting inflation risk repricing.
This chart highlights a clear downward trend in PPI inflation since the March 2025 peak, with a recent plateau around 3%. The data signals a transition from acute inflationary shocks to a more moderate, persistent inflation environment.
Looking ahead, the PPI trajectory will be shaped by several factors. Supply chain normalization and stable energy prices could ease inflation pressures. However, wage growth and fiscal expansion may sustain upward momentum.
Bullish scenario (20% probability)
- Global commodity prices decline sharply.
- Supply chains fully normalize.
- PPI drops below 1.50% by Q2 2026.
Base scenario (60% probability)
- Moderate inflation persists around 2.50-3.50%.
- Central Bank maintains current policy rate.
- Gradual easing of financial conditions.
Bearish scenario (20% probability)
- Energy prices spike due to geopolitical tensions.
- Wage inflation accelerates beyond 5%.
- PPI rises above 5% by mid-2026, forcing aggressive rate hikes.
The November 2025 PPI YoY reading for Iceland at 3.00% reflects a stabilizing but still elevated inflation environment. The data underscores persistent cost pressures in upstream sectors, which will influence monetary policy and financial markets in the near term. While the risk of a sharp inflation spike has diminished since early 2025, vigilance remains warranted amid external shocks and fiscal dynamics.
Investors and policymakers should monitor commodity prices, wage trends, and geopolitical developments closely. The Central Bank of Iceland’s cautious tightening path appears justified, balancing inflation control with economic growth. Financial markets are likely to remain sensitive to PPI releases as a barometer of inflationary momentum.
Key Markets Likely to React to Producer Price Index YoY
The Producer Price Index YoY is a critical gauge of inflationary pressures that directly impacts currency strength, bond yields, and equity valuations. Markets sensitive to inflation expectations and monetary policy shifts tend to react strongly to PPI data. For Iceland, key tradable assets include the Icelandic króna and sectors linked to commodity prices and financial conditions.
- USDEUR: Reflects currency pair volatility influenced by inflation and central bank divergence.
- OMX: Nordic equity index sensitive to regional economic conditions and inflation.
- ICE: Icelandic stock market index, directly impacted by domestic inflation and policy.
- ISKUSD: Icelandic króna versus USD, highly responsive to inflation data.
- BTCUSD: Bitcoin as an inflation hedge, often reacting to macro inflation signals.
Indicator vs. ICE Index Since 2020
Since 2020, the PPI YoY and the ICE stock index have shown an inverse correlation during inflation spikes. For example, the March 2025 PPI peak at 9.50% coincided with a 12% drop in ICE over three months. This relationship highlights how inflation pressures can weigh on domestic equities, particularly in inflation-sensitive sectors.
FAQ
- What is the significance of the Producer Price Index YoY for Iceland?
- The Producer Price Index YoY measures inflation at the producer level, signaling future consumer inflation trends and influencing monetary policy decisions in Iceland.
- How does the latest PPI reading compare to past data?
- The November 2025 PPI reading of 3.00% is lower than the March 2025 peak of 9.50% but remains above the mid-year lows, indicating persistent inflation pressures.
- What are the macroeconomic implications of the current PPI trend?
- Persistent upstream inflation supports continued monetary tightening by the Central Bank of Iceland, affecting financial conditions, currency strength, and fiscal policy considerations.
Takeaway: Iceland’s Producer Price Index YoY at 3.00% signals moderated but persistent inflation pressures, justifying cautious monetary policy amid evolving external risks.
OMX - Nordic equity index sensitive to inflation and economic growth.
ICE - Icelandic stock market index, directly impacted by domestic inflation.
ISKUSD - Icelandic króna vs. USD, highly responsive to inflation data.
USDEUR - Currency pair reflecting inflation and central bank policy divergence.
BTCUSD - Bitcoin as an inflation hedge, reacting to macro inflation signals.









The November 2025 PPI YoY for Iceland at 3.00% compares to 3.10% in October and a 12-month average of 4.30%. This marks a slight deceleration from last month but remains elevated relative to mid-year lows. The index’s volatility reflects shifting commodity prices and supply chain normalization.
Compared to the previous year’s peak of 9.50% in March 2025, the current reading indicates a significant easing of inflationary pressures at the producer level. The rebound from August’s negative reading (-0.60%) suggests underlying resilience in cost-push factors.