Updated in May 2025 to reflect food prices in Iceland in 2025.
Iceland is considered expensive in international comparison, not least in terms of food. There are many factors at play to explain this, such as the size of the market, large share of imported food and oligopoly. The government levies heavy tax on imported agricultural products in order to protect domestic produce, which is not able to compete with the large-scale production of bigger markets. Let’s take a closer look at the prices for groceries, eating out and Icelandic specialty foods in May 2025.
Grocery Prices in Iceland
Inflation has been decreasing again in Iceland in recent months and went down to 4.2% in the latest issued numbers (1 April 2025). The most popular grocery stores in Iceland are Bónus (the cheapest store) and Krónan (another low price grocery store). Bónus is older and more basic in terms of look and variety, whereas Krónan has a stronger emphasis on e.g. variety of fresh fruits and vegetables and being environmentally responsible. The biggest competitor to those two is Costco, which has one store in Iceland.
*Alcohol has through the years only been available in the state monopoly stores (Vínbúðin), bars and restaurants. However, two shops, Nýja Vínbúðin and Heimkaup, started selling alcohol online around three years ago after claiming they found a loophole in the law to do so (registering as online shops abroad, delivering to Iceland).
Icelandic Food and Specialities
Special Icelandic food is for example skyr (dairy), flatkökur (flat bread), hangikjöt (smoked lamb), plokkfiskur (fish stew) and harðfiskur (dried fish). Putting hangikjöt slices with butter spread on flatkökur is a magic mix that many Icelanders miss if they move abroad.
Another category that people often miss is Icelandic candy. The most popular candy is called Þristur (literally meaning three in cards) which is a small milk chocolate covered bar with liquorice bits inside and soft chocolate mousse. It is probably the most addictive candy for Icelanders. Draumur is a milk chocolate bar with liquorice inside. Tromp is chocolate coated licorice with coconut filling. Lava Cheese is melted cheddar cheese (its shape resembles solidified lava) and the founders got the idea from the melted cheese from a grilled sandwich that floats out and solidifies on the grill. Many people consider this byproduct to be the best part of a grilled sandwich.
Restaurant Prices
Our guide to restaurant prices in Iceland gives more detailed information on this part but let us sum up the main points here. In the fast food category, you could get a hot dog with everything (ein með öllu) at Bæjarins Beztu for 820 ISK or a lamb shawarma wrap at Mandi for 2090 ISK. In terms of casual dining, you could get a fish of the day at Snaps Bistro for 5490 ISK or a lamb shank at Salka Valka for 5350 ISK. If you are thinking about fine dining, you could get for example a beef tenderloin at Grillmarkaðurinn for 9690 ISK or a rib-eye Danish crown at Apótek for 10490 ISK. Last but not least, if you want a traditional Icelandic meal, you could try Icelandic lamb meat soup at Café Loki for 4750 ISK or a singed sheep’s head at Íslenski barinn for 3950 ISK.
Conclusion
Food prices in Iceland are high in international comparison and if you want to save money on food in Iceland it can pay off to look for the cheapest stores, Bónus and Krónan rather than e.g. Heimkaup, Hagkaup, Nettó and Krambúðin. For individual items, the price range varies a lot.
In restaurants, the price difference between fast food and casual dining options can be significant but the difference between casual and fine dining restaurants is surprisingly little compared with other countries.
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