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 March 2023.
Grocery Prices in Iceland
Inflation has been growing in Iceland and went over 10% in the latest issued numbers. 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. Here are the price levels of common food items:
- Whole milk (1 L) – 199 to 229 ISK
- Coffee, Gevalia (500 g) – 939 to 959 ISK
- Bread (500 g) – 399 to 699 ISK
- Eggs (12) – 696 to 1324 ISK
- Plain rice (1 kg) – 439 to 698 ISK
- Cheese (1 kg) – 1899 to 2419 ISK
- Chicken fillets (1 kg) – 2959 ISK
- Apples (1 kg) – 261 to 990 ISK
- Bananas (1 kg) – 300 to 360 ISK
- Ground beef (1 kg) – 2698 to 2990 ISK
- Oranges (1 kg) – 297 to 432 ISK
- Tomatoes (1 kg) – 640 to 921 ISK
- Potatoes (1 kg) – 296 to 549 ISK
- Onions (1 kg) – 228 to 264 ISK
- Lettuce head – 325 to 499 ISK
- Bottle of wine (mid-range)* – 3500 to 4000 ISK
- Beer (0.5 L)* – 350 to 400 ISK
*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 two years ago after claiming they found a loophole in the law to do so.
In a recent price survey by the Icelandic Confederation of Labour, the price for a shopping basket for a dinner gathering in the cheapest store (Bónus) is 53,196 ISK (355 EUR/377 USD) and Krónan has almost the same price but the most expensive store (Heimkaup) would charge 54% more for the same products, meaning it can pay off to look for a Bónus or Krónan store if you are buying in bulk. In this hypothetical dinner gathering, the menu would consist of a leg of lamb with sauce, potato gratin and salad. The appetiser would be a shrimp cocktail and for dessert, there would be an apple pie.
Verðgáttin (e. The Price Portal) is a new initiative by labour market organisations in Iceland and the government. Its aim is to inform consumers, counter inflation and increase pricing transparency. It compares prices of common food items between the three biggest supermarket chains (Bónus, Krónan and Nettó). It also maintains the pricing history of those items. The reaction from the grocery stores has been to lower their prices on some of those items, positive news for consumers. Users can create their own shopping carts on the website to see the price differences between the three stores on items they would buy. The website is only in Icelandic at the moment.
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.
- Skyr – plain (500 g) – 409 to 449 ISK
- Skyr with blueberries (500 g) – 499 to 544 ISK
- Flat bread (170 g) – 168 to 282 ISK
- Smoked lamb slices to put on bread (115 g) – 888 to 1028 ISK
- Dried fish (100 g) – 1599 to 1699 ISK
- Fish stew (400 g) – 699 to 899 ISK
Apart from food 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. 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.
- Þristur (250 g) – 430 to 649 ISK
- Draumur (180 g) – 499 to 539 ISK
- Tromp (285 g) – 499 to 699 ISK
- Lava Cheese (60 g) – 660 to 719 ISK
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 690 ISK or a lamb shawarma wrap at Mandi for 1590 ISK. In terms of casual dining, you could get a fish of the day at Snaps Bistro for 4930 ISK or a lamb shank at Salka Valka for 3800 ISK. If you are thinking about fine dining, you could get for example a beef tenderloin at Grillmarkaðurinn for 9990 ISK or a 3 course menu of the day at Geiri Smart for 9500 ISK. Last but not least, if you want a traditional Icelandic meal, you could try Icelandic lamb meat soup at Café Loki for 2300 ISK or a singed sheep’s head at Íslenski barinn for 3750 ISK.
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. This becomes apparent when you compare the price of a hypothetical shopping cart for a dinner gathering, where the most expensive store charges 54% more than the cheapest options (Bónus and Krónan). For individual items, the price range varies a lot. The price difference between the most expensive and cheapest options for Icelandic dairy product Skyr is relatively little (10%) while there is a significant difference between the prices for cheese (27%).
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.