or is it just that the British are cheap?
It is true that most of what you see to buy, and need to buy in Iceland is expensive if you compare it to what a pound buys in the UK. At a rough estimate things “cost” twice to three times as much in Iceland as they do here. Alcohol is an “impressive” example – a half of lager costs a fiver in an Icelandic bar.
For Icelanders prices don’t seem as high – their incomes are proportionately higher, so Icelanders only work the about same number of hours to have roughly the same standard of living as Brits do.
There are lots of reasons why costs appear so high to us - Iceland’s tax system falls heavy on purchases and less heavily on income, energy is very cheap (hydro and thermal energy in abundance), but most food, cars, domestic goods etc have to be imported as Iceland has little manufacturing, Iceland also is highly reliant upon exports of fish for foreign exchange – all these factors (and more) mean that the Icelandic economy is very different from other European economies.
The questions you have to ask yourself are – is it worth it? and is it worth moaning about?
From my point of view the answers are a resounding yes, and a heartfelt no. Iceland is unique – it has stuff that is so different and exciting that paying a bit extra is worth it - and moaning about it doesn’t help – you’re not being ripped off, and whinging is only going to ruin your holiday. Eating out costs around twice as much as in the UK – but the quality of restaurant food is consistently better than in the UK.
The British (amongst others) have it cheap when travelling to so many places in the world – eg India, North Africa, SE Asia (where people are often paid a pittance and live in appalling conditions) – we need to be more realistic when travelling to countries where the vast majority of residents have the same standard of living as the tourists.