Introduction

When considering travel to Iceland, questions about the cost of living, particularly food, often arise. Is food in Iceland expensive compared to the cost of living? The answer can be complex as it depends on various factors such as buying habits, location, and consumption venues. Let's explore the nuances of this question.

Understanding the Cost of Living: Food in Stores vs. Restaurants

While it's true that food in Iceland might seem expensive, the comparison should take into account different purchasing environments. For instance, food in stores tends to be less expensive, as it benefits from economies of scale and the ability to increase supply. However, restaurants and other dining venues can be more costly due to higher service costs, taxes, and the lack of direct competition. Here's a breakdown:

Food in Stores

Buying food in stores can be surprisingly affordable. For example, take Icelandic skyr, a delicious yogurt-like product widely sold in grocery stores. Granite, another popular and healthy choice, can be found on store shelves as well. When hosted by a friend in Iceland, I noticed that the cost of groceries was much lower than anticipated, thanks to buying in bulk and avoiding restaurants except for special occasions.

Restaurants and Catering

The cost of eating out in Iceland is notably higher. A common joke among Icelanders is that a burger at a table-service restaurant costs around 2500 Icelandic Krónur (ISK), and a bottle of beer is around 1000 ISK, which, considering a 24% value-added tax (VAT), can be significantly more than in other countries. This is due to the 24% VAT and the fact that Iceland is heavily reliant on imported food, which adds to the cost.

Additionally, the tourist season and high demand in Reykjavik can drive up prices even further. A dish like whale can cost around 5000 ISK outside Reykjavik, but in the capital, it can be more than that. To save money, travelers are often advised to eat snacks throughout the day, such as skyr or granola, and to stay in places with cooking facilities where they can prepare their own meals.

Tax and Regulations

The 24% VAT in Iceland adds a significant cost to final prices. This tax is applicable to most goods and services, further increasing the overall cost of living. The tax is a key factor in making Icelandic food relatively more expensive compared to other countries.

Relativity and Currency Factors

The cost of living in Iceland can also be understood in relative terms. For instance, some time ago, there was a significant devaluation of the Icelandic Krona by half around 2007. This devaluation made prices more “relatable” for those who were adjusting to the higher costs. However, adjusting to the higher costs is a more fluid process, and food prices can still be challenging for some.

Another factor is the geographical isolation of Iceland. Being far from major food-producing regions means that many food items must be imported. This increases the cost of living, especially for perishables and luxury items. The harsh weather conditions also add to the transportation costs and the overall cost of food.

Conclusion: Strategies to Navigate High Food Costs

While food in Iceland is more expensive compared to the cost of living in other countries, there are strategies to manage costs. Eating snacks throughout the day, staying in places with cooking facilities, and preparing your own meals are practical ways to save money. Additionally, understanding the tax implications and the impact of the geographic location can help travelers and residents better navigate the high food costs in Iceland.

For a more concrete measure, compare your food expenses in Iceland to your home country. As a reference, a visit to McDonald's in Reykjavik can often provide a comparative insight. Keep in mind that Reykjavik is a tourist hub, and prices might be slightly higher compared to other parts of Iceland.

In summary, while food in Iceland can be expensive, it is possible to manage costs effectively and enjoy a fulfilling stay. Understanding the factors contributing to the high costs can help make the experience more enjoyable and budget-friendly.