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Iceland is a notoriously expensive country for many reasons. According to Numbeo, the tiny island nation in the North Atlantic is the 9th most expensive country in the world to live in. Because of its location, many products have to be imported, which can be very expensive. A high labour tax makes its cost more expensive than in other countries as well. What may seem expensive is offset, however, by the excellent social and welfare system.
Eating out in a cheap restaurant in Reykjavik costs £14.20 (2,000 ISK), whereas a three-course meal at a mid-range restaurant for two persons costs £85 (12,000 ISK). While having a cappuccino in a cafe in Reykjavik costs £3.81 (536 ISK).
While Iceland is a remote island in the North Atlantic, many things have to be imported, which can obviously elevate prices. A litre of milk in Reykjavik will cost you £1.10 (154 ISK). A kilogram of rice will come up to £2.23 (313 ISK), while one kilogram of local cheese amounts to £12.29 (1,731 ISK).
In Iceland, there are no trains (yet), so public transportation consists of buses and taxis. For a monthly bus pass in Reykjavik you will pay £84 (11,875 ISK). The price for an initial taxi ride costs £4 (600 ISK), and to buy a Volkswagen Golf costs £24,144 (3,400,000 ISK).
This is the one area in which Iceland really cuts the consumer price index some slack because of the inexpensive geothermal heating that circulates through the city’s infrastructure. In Reykjavik you can pay basic utilities in an 85 sq. meter apartment for £90 (12,700 ISK). The cost of internet in Reykjavik is £48 (6,715 ISK) per month.
To rent a one-bedroom flat in the city centre of Reykjavik costs £1,341 (189,000 ISK) per month, which is not much of a difference from the price of a three-bedroom apartment outside the city centre of Reykjavik that’s at £1,715 (241,515 ISK).