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!

Highclere Castle—the Real-Life Downton Abbey—Is Available to Rent on Airbnb

Highclere Castle, used as the setting for Downton Abbey
Highclere Castle, used as the setting for Downton Abbey
Emily_M_Wilson/iStock via Getty Images

Have you ever wanted to spend a night in a castle? And not just any castle—the Downton Abbey castle, Highclere Castle? On November 26, one lucky couple will get the opportunity to relive the TV show and movie, when castle owners Lady and Lord Carnarvon will cordially invite one person and their guest of choice to spend the night in the castle, which is located in Hampshire, England—about 45 miles west of London. On October 1 (Airbnb reservations go live at noon BST) anyone with a verified profile, positive reviews, and passion for Downton Abbey can vie for the opportunity. Even though the castle has 300 rooms, they are only making one bedroom available, for $159.

Upon arrival, the royals will host cocktails with the guests in the saloon. Visitors will hear stories from more than 300 years of Highclere Castle history (construction on the castle began in 1679, and has been in the Carnarvon family ever since).

“I am passionate about the stories and heritage of Highclere Castle and I am delighted to be able to share it with others who have a love of the building and its history,” Lady Carnarvon said in the Airbnb listing.

The Earl and Countess will host a dinner for the guests in the state dining room, and afterwards have coffee in the library. Before bed, the guests’ butler will escort them to their gallery bedroom. The next morning, guests will receive a complimentary breakfast, a private tour of the 100,000-square foot castle and 1000-acre grounds, and a special gift from the Carnarvons. (Airbnb will also make a donation to The International Federation of Red Cross and Red Crescent Societies.)

It should be noted the castle doesn’t have Wi-Fi or central air, but it does have fireplaces and central heat. There are a few rules guests must follow, though: all newspapers must be ironed; one butler per person; cocktail dress is required at dinner; gossip is restricted to downstairs; the listing is midweek because, as the Dowanger once said, “What is a weekend?”

If you don’t win the opportunity to stay at Highclere, all is not lost: you can tour the castle year-round.

The 25 Best Places to Live in America

Robin Zeigler/iStock via Getty Images
Robin Zeigler/iStock via Getty Images

It's impossible to please everyone with a list of great places to live. Some people prefer big cities, while others may be looking for a quieter place to escape to. The qualities people value in a location—like affordability, culture, and safety—also vary from person to person. But when it comes to diverse options, MONEY magazine's annual list of the 100 best places to live in the U.S. has something for everyone. Its list for 2019 includes towns, urban neighborhoods, and mid-sized cities in all regions of the country.

To compile this year's list of the best places to live, MONEY only looked at places that met certain criteria. The locations on the list all have populations of 50,000 or more. For cities where the population exceeds 300,000, the publication chose individual neighborhoods with 5000 to 200,000 residents to rank. Spots with more than double the national crime risk, less than 85 percent its state's median household income, and little ethnic diversity were automatically removed from consideration.

Of the 1796 places that met those standards, MONEY chose 100 that excelled in areas like housing, education, cost of living, diversity, income, safety, and amenities. In what seemed like a surprise to some, Clarksville, Tennessee, came out on top. The city, which is home to about 160,000 people, boasts a growing economy, a thriving small business scene, and an affordable housing market. It's also located less than an hour from Nashville. Clarksville was followed by Round Rock, Texas, in the second slot and Fishers, Indiana, coming in at number three.

It wasn't just towns and mid-sized cities that made the list. Neighborhoods in the biggest cities in America were also named some of the best places to live, including the Fulton River District in Chicago, Illinois (No. 4), and Ditmas Park in Brooklyn, New York (No. 11).

You can check out the top 25 locations from MONEY's list below and see the full list of 100 here. If you'd like to broaden your living options even further, here are the safest cities to live around the world.

  1. Clarksville, Tennessee

  1. Round Rock, Texas

  1. Fishers, Indiana

  1. Fulton River District in Chicago, Illinois

  1. Country Club Heights in Charlotte, North Carolina

  1. Draper, Utah

  1. Bentonville, Arkansas

  1. Madison, Wisconsin

  1. Meridan, Idaho

  1. Winter Garden, Florida

  1. Ditmas Park in Brooklyn, New York

  1. Redmond, Washington

  1. Pearl in Portland, Oregon

  1. Dranesville, Virginia

  1. Rochester, Minnesota

  1. Johns Creek, Georgia

  1. Charleston, South Carolina

  1. Irvine, California

  1. Iowa City, Iowa

  1. Columbia, Maryland

  1. Spring Valley, Nevada

  1. Goodyear, Arizona

  1. LoDo in Denver, Colorado

  1. O'Fallon, Missouri

  1. Shawnee, Kansas

[h/t MONEY]

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