Is Iceland expensive? An honest breakdown

Is Iceland expensive? Yes, genuinely, and it is worth knowing why before you go, so the prices do not blindside you. When I first went as a student, we travelled with a tent, and that was a deliberate decision, not a romantic one. Iceland is one of the priciest countries I have visited.

The reasons are built into the place. It is a small, remote island near the Arctic, so almost everything is imported and shipped a long way; the population is tiny, which means little competition across shops, fuel and car hire; and wages and the standard of living are high, which feeds straight into the cost of eating out. Car rental is expensive, hotels are expensive, and restaurants are expensive. None of it is a rip-off, it is just how the economics of a remote island work.

So plan around it rather than hoping for the best. Book your car and your beds well in advance, and know the prices before you fly; the surprises here are costly ones. If you want to keep the budget down, camp, and stock up on food at a supermarket in Reykjavik before you head out, rather than eating every meal in restaurants. It is often worth driving a bit further from the headline spots to find cheaper accommodation, and on a tight budget it pays to plan the whole route around where you can actually afford to sleep.

The good news is that the best of Iceland is free. The sights cost nothing, the nature is staggering, and the hiking, which is half the reason to come in the first place, does not cost a krona.