fæðuvöruverðindex

The **fæðuvöruverðindex** (often abbreviated as **FVV-index**) is an Icelandic economic indicator that measures the price changes of a basket of goods and services commonly purchased by households. Introduced in 2007 by Statistics Iceland, it serves as a key tool for assessing inflation and consumer price trends in the country.

The index tracks the average price changes of approximately 600 items across various categories, including food, housing, transportation, and leisure. Unlike the broader Consumer Price Index (CPI), the FVV-index focuses specifically on goods and services consumed by Icelandic families, providing a more targeted view of cost-of-living pressures. It is published monthly and is widely referenced by policymakers, economists, and businesses to gauge economic stability and adjust financial strategies accordingly.

The FVV-index is calculated using a weighted formula, where different goods and services are assigned values based on their relative importance in household budgets. For example, housing costs and food prices carry higher weights due to their significant impact on consumer spending. The index is also adjusted for seasonal variations to ensure accurate comparisons over time.

In Iceland, where economic conditions can fluctuate rapidly due to factors like tourism, energy costs, and global commodity prices, the FVV-index plays a crucial role in monitoring inflationary trends. It helps the Central Bank of Iceland in setting interest rates and informs government decisions on fiscal policy. Additionally, businesses use the index to forecast pricing adjustments and manage supply chains effectively.

While similar to other national consumer price indices, the FVV-index is tailored to Iceland’s unique economic landscape, making it a valuable resource for understanding domestic price dynamics. Its transparency and regular updates contribute to informed economic discussions and policy-making in the country.