A programming error has been discovered in labour cost calculations in the building cost index, resulting in accumulated underestimation of the index since March 2010. It is estimated that today the building cost index level is approximately 4% lower than it should be.

Statistics Iceland is currently recalculating the index and the results will be published on 20 April 2011 along with the publication of the building cost index in May 2011. The building cost index in May 2011 will increase by more than 4% as a result of the correction.

Statistics Iceland will also on 20 April publish a new corrected shadow time series from January 2010 to April 2011 to guide users in revaluating settlements of indexed contracts. The series will show the correct building cost development in the period.

Statistics Iceland expresses apologies to all users of the index for the inconvenience caused by the error and will take extensive measures to prevent this kind of mistake in the future.

Further information is available in this memorandum.