Household gross disposable income is estimated to have increased by 9.2% from 2021 to 2022. Disposable income per capita amounted to 4.9 million ISK in 2022 and is estimated to have increased by 6.5% from the previous year. The purchasing power of household disposable income per capita decreased by 1.7% during the same period.
Household gross disposable income is estimated to have increased by 9.1% in the fourth quarter of 2022, compared with the previous year’s corresponding quarter. Disposable income per capita amounted to just over 1.25 million ISK in the quarter and is estimated to have increased by 5.8% compared with the fourth quarter of 2021. Due to increased inflation rate, the purchasing power of household disposable income per capita in the fourth quarter of 2022 decreased by 3.4% compared with the previous year’s corresponding quarter, but the consumer price index increased by 9.4% during the same period.
Increase in household income from wages and salaries
Household total income is estimated to have increased by 9.9% in 2022 from the previous year. Increase in wages and salaries bears the brunt of the total increase, increasing by roughly 260 billion ISK from the previous year or roughly 15%. For the same period, taxes on income increased by roughly 27 billion ISK or about 5.5%. The increase in wages and salaries due to collective wage agreements as well as reduction in unemployment are the significant driving factors behind the total increase. According to Statistics Iceland wage index, salaries in Iceland increased by 8.3% in 2022 from the previous year while the number of employed persons increased by 7% during the same period.
Household interest expenses are estimated to have increased by 35.5% in 2022 from the previous year. During the same period, household property income increased by 16%, where household interest income increased by 52.8%.
Household total income increased by 9.1% in the fourth quarter of 2022, compared with the previous year’s corresponding quarter, where wages and salaries increased by 13.9% and property income increased by 14%. Household total expenditure increased by 9% in the fourth quarter of 2022, compared with the previous year’s corresponding quarter, where taxes on wages and salaries increased by 4.1% and interest expenses increased by 54%.
The increase in interest income and expense can be traced to increased capital cost of households along with a large increase in the Central Bank‘s Key interest rate (policy rate) in the period.
Social benefits other than social transfers in kind decreased by roughly 1.3%
Social benefits other than social transfers in kind are estimated to have decreased by 6.8 billion ISK from 2021, a decrease of 1.3%.
The share of social benefits other than social transfers in kind of household total income was measured at 15.1% in 2022, compared with 16.8% in 2021 and 17.3% in 2020.
The household sector’s net social contributions increased by 14.8% in 2022 compared with 8% decrease in 2021. This can somewhat be explained by a reduction in the insurance premium from 6.35% to 6.1% in 2021 and an increase to 6.35% in 2022.
Social benefits other than social transfers in kind are estimated to have decreased by roughly 0.5% in the fourth quarter of 2022, compared with the previous year’s corresponding quarter, equivalent to 14.6% of household total income in the quarter. The household sector net social contribution increased by 14.6% in the fourth quarter of 2022, compared with the previous year’s corresponding quarter.
These are preliminary figures and thus Statistics Iceland will continue to publish revised figures when exhaustive information is available, e.g. tax returns from corporations and individuals.