The Reasons Why Iceland Is So Expensive

iStock.com/Leopatrizi
iStock.com/Leopatrizi

More Americans are taking vacations to Iceland, and many are returning home with sticker shock. According to Iceland Magazine, “consumer prices in Iceland are on average 66 percent higher than in Europe,” with costs in the land of fire and ice outpacing famously expensive countries such as Switzerland, Norway, and Denmark.

Just look at the prices for food in Iceland’s capital of Reykjavík: A pre-made sandwich at a grocery store can cost more than $10, while a single teabag (with “free” hot water) can run you $4. A meal for two at a casual restaurant regularly costs in the ballpark of $80 to $100 while a beer at a pub downtown goes for about $12 during regular hours. In other words: Visiting Iceland is sort of like being trapped in an airport ... except this airport has volcanoes.

As for what makes the country so expensive, there’s no single explanation. It’s a combination of politics, economics, and geography.

Let’s start with geography. Since Iceland nearly tickles the Arctic Circle, its climate is not conducive to farming. There are few native crops and the growing season is short. According to a report from the European Consortium for Political Research [PDF], Icelanders produced “64.9 percent of their own food and beverages in 2010.” The rest of that food was imported. The same goes for most other goods.

The cost of importing those products—usually from the UK, Germany, the U.S., and Norway—gets passed on to the consumer. In Iceland, imported sweets and alcohol are slapped with an extra cargo fee and all wheat products are subject to a relatively high tariff. So prepare to shell out for that bread.

The country’s currency also keeps costs high. In 2008, Iceland was plagued by a financial crisis that saw the country’s three banks fail and the value of the national currency, the króna, plummet. But the country has seen a miraculous recovery. Since 2009, the króna has strengthened by a whopping 40 percent against the euro. In 2017, it was deemed the world's best-performing currency. That has caused the purchasing power of the U.S. dollar to decrease.

Taxes also add to the cost. Like most countries, Iceland has a valued-added tax, or VAT. (In the United States, a close equivalent would be the state sales tax.) The VAT for goods in Iceland is 24 percent, while the VAT for foodstuffs is taxed at a discounted rate of 11 percent. For Americans, these tax rates are very high. Most states don’t even charge a sales tax on food at all.

(However, while taxes are a contributor, they are not the cause of high costs in Iceland. Many countries have similarly high VAT rates and are not as expensive. Germany, for example, has a 19 percent VAT—and a 7 percent VAT on foodstuffs—but is home to significantly cheaper groceries than those sold in the United States. It’s also important to know that, as an international visitor, you can get some of your VAT refunded.)

Rather, the biggest contributor to costs in Iceland is the country’s high standard of living. In Iceland, the average pre-tax income is about $60,000, with a median income of about $47,000. (In the U.S., the average income is about $48,150 with a median of around $31,000.)

In Iceland, approximately 92 percent of the country’s working population is part of a labor union. Consequently, people who work jobs that Americans might consider “low-wage”—especially jobs in the service industry—earn much higher wages and enjoy more benefits. In fact, the national monthly minimum wage for most industries is 300,000 ISK, or about $2500 per month. That’s equivalent to $15 an hour. But since employees earn more, customers generally pay more for goods.

And, of course, any tourist complaining about high prices should take a moment to point a finger at the mirror. Since 2010, Iceland has seen tourism multiply fivefold. With a growing number of people competing for a limited supply of goods, prices have continued to rise; the dastardly supply and demand curve strikes again!

Texas’s Magnolia Hotel—a Reputed Paranormal Hotspot—Will Be Opening Its Doors to Overnight Guests

iStock/THEPALMER
iStock/THEPALMER

Those who view The Shining’s Overlook Hotel as a desirable vacation spot now have the chance to make their spooky dreams come true. The Magnolia Hotel—supposedly haunted by a total of 13 ghosts—will soon open its doors to overnight visitors.

Located in Seguin, Texas, the hotel’s history can be traced back to 1840, when Texas Ranger James Campbell first constructed a log cabin on the property. The cabin later expanded into a hotel, which saw some success in the mid-1800s and early 1900s. Unfortunately, the hotel was then abandoned for many years, and was almost lost to extreme disrepair. In an effort to save it, members of Preserve Texas placed the building on the organization's Most Endangered Historic Places list along with several other sites. It eventually captured the attention of current owners Jim Ghedi and Erin Wallace Ghedi, who bought the Magnolia Hotel in March 2013.

It didn’t take long for the Ghendis to realize something strange was going on. According to Country Living, the couple began experiencing supernatural events as soon as repairs commenced. Photos showed strange figures climbing out of mirrors; doors would be heard slamming by unknown forces; and shadowy outlines could be glimpsed hovering in doorways.

It’s no surprise the Magnolia Hotel is haunted given its gruesome history. Not too long after he built the original log cabin, James Campbell was reportedly killed by Native Americans during a trip to San Antonio. Three decades later, notorious Texan serial killer Wilhelm "William" Faust traveled to the nearby town of New Braunfels in order to kill his wife. He instead mistakenly butchered Emma Voeckler—the 12-year-old girl who was unfortunately sharing a room with his wife at the time—and fled to the Magnolia Hotel before his arrest. Some claim one of the ghosts is poor Emma, eternally bound to the area where her killer hid directly after her death.

The hotel’s website states that overnight reservations will open on August 12 on a first-come, first-served basis. Accommodations include fully restored suites consisting of two bedrooms, a full bath with a walk-in shower, and a non-cooking kitchen. Guests and non-guests alike can also partake in the hotel’s guided ghost tours, which the site warns are “not for the faint of heart.”

This Adjustable Bag Mate Makes Traveling Anywhere Much More Convenient

NEX
NEX

Carrying a backpack for a long period of time can lead to aching in your neck, back, or shoulders. Plus, keeping essentials in your bag, like a passport or phone, can make them a hassle to retrieve when necessary. NEX, now raising money on Kickstarter, is a three-in-one bag mate that makes traveling with a backpack pain-free and convenient.

This new "bag mate" is designed with air cushions that evenly distribute the weight of your backpack across your shoulders. Since it makes your bag feel 30 percent lighter, it also helps improve your posture.

NEX features functional and hidden pockets to not only make it easier to grab your essentials when on the go, but also keep them secured—since they are much safer on your shoulders than in your bag where people can easily steal them. Each strap is designed with three inner pockets as well as a hidden pocket to store everyday valuables such as your keys or cash.

Cash and keys going in a pocket on a NEX bag mate
NEX

Sometimes a backpack isn't necessary for quick outings, so NEX can act as a cross-body bag as well. Easily clip it on and adjust the fit to your liking, and now NEX can be used when you're simply going out for a run or grabbing groceries. Plus, it's designed with recycled waterproof material, meaning you don't have to worry about your valuables getting damaged due to the weather.

guy walking with blue cross body bag
NEX

With over a week left in its campaign, NEX has already surpassed its goal of $1000, raising over $47,000 as of June 25. By pledging $19 or more, you can get your own bag mate on KickStarter. Shipping is scheduled for August.

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