Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports

Three major Icelandic banks have collapsed, raising uncertainty about Iceland’s currency and ability to repay loans. Inventories of goods, including food and clothing, are shrinking. The island nation must import most food and other products, while the “government has asked banks to prioritize foreign currency transactions for essentials such as food, drugs and oil,” explains Chad Thomas, reporting for Bloomberg. Before the credit crisis, wholesalers gave stores up to 90 days credit, but now demand Icelandic retailers to pay before delivery. As a result, retailers try to focus on ordering only essential items. Iceland ranks fifth largest in per-capita gross domestic product, but the credit crisis combined with shortages hiked prices. Now, Icelanders must demonstrate that they can quickly set priorities and tighten their belts. – YaleGlobal