Reykjavik - People still wander through shopping malls here but their bags of purchases have become lighter, as spiraling prices have finally dampened the spending glee that has ruled in Iceland in recent years.
Although Icelanders' legendary level-headedness has helped keep panic at bay as the global financial crisis has pushed their tiny island nation to the brink of bankruptcy, the effects can be seen in dwindling consumption.
"Before, I used to eat my lunch quite often in a restaurant. Today I'm on some kind of diet," Kristjan Oddsson says as he leaves the local supermarket with his lunch for the day: two bananas and an orange.
The accountant in his 50s is sure he will not yet have trouble making ends meet at the end of this month, but says it is the uncertainty of tomorrow that is the most difficult to bare.
"The coming months are going to be very difficult. Let's hope that things will then get back a little bit to normal in the spring," he said.
According to official statistics, prices in Iceland had on average soared 14% in September compared to the same month in 2007 as its krona has plummeted more than 40% compared to the euro in the past year.
Maybe something good will come out of this
For food products, inflation last month stood at 20.5%.
"For two bags of goods, nothing fancy really, I just paid 9 000 kronur (€26.70, $36.15). Earlier it would have cost me 4 000 or 5 000 kronur," Ingibjoerg Thorisdottir, a young single mother, said.
She however tried to remain upbeat despite the continuing flood of devastating financial news, including the nationalisation of Iceland's three largest banks last week and Reykjavik's ongoing attempts to secure a massive loan from Russia.
"Maybe something good will come out of this? Maybe this will dampen consumerism in the future?" she said hopefully.
The October inflation figures have yet to be released, but after the government last week was forced to abandon attempts to peg the plunging krona to the euro due to lagging market confidence in its currency, the numbers will likely be grim.
Soaring prices are a particular blow to families and businesses at this time of year, just ahead of what traditionally is the year's ultimate spending frenzy in the weeks before Christmas.
"We're in the middle of the storm, so it's difficult to have an overview over how bad it is," Gunnar Haraldsson, the director of the Institute of Economic Studies at the University of Iceland, said.
"But people have already registered a decrease of their purchasing power because of the fall of the Icelandic krona," he said, adding glumly: "I think that Christmas shopping will not be as crazy as last year."
Car sales dropping off
In Reykjavik's largest shopping centre however, the number of customers has dropped by only 2% so far this year compared to the same period in 2007, according to Sigurjon Orn Thorsson, who runs the centre.
And in the upscale boutiques the smiles and cheer have yet to fade, but there is a sense elsewhere that the other shoe has yet to drop.
"I've not seen the effects of the crisis yet, but I think that it's coming because people are getting more careful," one saleswoman in an off-the-rack clothing store says.
In a nearby jewellery shop, the owner Erla Magnusdottir explains that after seeing the price of her bulk purchases from abroad skyrocket by about 30%, she had been forced to cut deep into her margins to avoid frightening away all her customers.
Car sales seem meanwhile to have dropped off, and the vehicles that are sold are of a different calibre than the ones that flew out of the dealerships a year ago.
"People look more and more at a gasoline-efficient Renault rather than a big German car," an employee of the B&L dealership said.
Over the past decade, the Nordic nation of 313 000 people has seen its economy grow on average 4% a year with a peak of 7.7% in 2004, mainly led by a booming and aggressively expanding financial sector that through a range of credit offers has egged Icelanders to spend ever more.
As they now find themselves at the eye of the global financial whirlwind, Iceland's three main banks are now paying a high price for their extravagant ways: pushed to the verge of bankruptcy by lacking liquidity, they were all taken over by the state last week.
"It's been one big party and now we have to clean up the mess," a woman says in front of the parliament building, where she and a handful of others have been demonstrating for days.
- AFP