Iceland inflation soars to 17.1%

The annual rate of inflation in Iceland has escalated to a record high of 17.1% as the country battles the worst financial crisis in its history.

The Icelandic statistics agency said prices rose in November alone by 1.74% compared to the previous month.

Food prices increased fastest, up 30.6% over the year, as the country's currency plummeted.

The agency warned that inflation rate could rise beyond 20% in the future, threatening the economy.

At its last meeting, at the beginning of November, the Icelandic central bank left interest rates unchanged at 18%, the highest level in Europe, in an effort to fight inflation.

Prices of imported goods have risen fast after the local currency, the Icelandic krona, plunged amid global financial turmoil.

The International Monetary Fund (IMF) has recently approved a $2.1bn (£1.4bn) loan for Iceland, after the country's banking system collapsed in October.

Iceland's government seized control of all three of the nation's major banks in a bid to keep the country's financial system afloat.