Oil Price Cap and Rent Controls

LÍV, VR and Fagfélögin welcome the fact that inflation has not increased month on month and that underlying inflation is declining. Prices of imported food products have fallen slightly, suggesting that the price freezes advocated by the unions following the failure of the assumptions underpinning the collective agreements are now beginning to deliver results.

However, the unions express concern about developments in the prices of domestically produced food. Both lamb and poultry prices have risen by 3% month on month, representing an exceptionally sharp increase.

Inflation is now at the same level both including and excluding housing costs, indicating that housing is no longer the main driver of inflation. Nevertheless, rents continue to rise, affecting the consumer price index through both rental and owner-occupied housing. Electricity prices are also increasing.

Finally, oil prices remain a cause for concern. Global oil prices have now reached the same level as in May this year, when the Government took the progressive decision to introduce an oil price cap and temporarily suspend value added tax (VAT). The latest inflation figures demonstrate unequivocally that these measures should have been extended.

LÍV, VR and Fagfélögin call for the following measures to curb inflation:

• Introduce statutory rent controls without delay to halt increases in residential rents and thereby reduce housing-related inflation, alongside other measures to address housing challenges.

• Reintroduce the oil price cap to protect households from the knock-on effects of global oil prices.

• Remove exemptions from competition oversight in domestic food production and take action to halt excessive price increases for domestically produced food.

• Identify measures to prevent further increases in household electricity and heating costs.

VR, LÍV and Fagfélögin reiterate the urgent need to take every possible measure to reduce inflation, which should, in turn, lead to lower central bank interest rates.

High interest rates alone have not been sufficient to bring inflation under control. Instead, they have created financial insecurity for many households while hampering economic growth and development.

The unions will continue to monitor price developments and inflation closely, in the hope that the conditions underpinning the collective agreements will continue to hold.