British Consumers Pay Large Premiums for Apple Devices
Apple takes a bite out of UK consumers with prices 23% higher than in the USA
On the 10th September Apple is expected to announce their latest iDevices, notably the update to the iPhone, Apple Watch and the iPad range. In Britain an iPhone XR costs £799 ($983.85)1; in America $799. Both iPhones’ components come from the same suppliers, and both are assembled in the same factory in Sriperumbudur, India. The distance to Baltimore, USA is 11,000miles while to Southampton, UK is 7,500miles. Given the difference in distance one might assume the UK price would be cheaper, however British consumers are paying 23% more for the same device.
This Apple price differential is not limited to the iPhone XR. Data researched by World Economics for its World Price Index (WPI) on a range of Apple products which are identical in both markets shows the American versions cost on average 22-23% less than in the UK when adjusted for current market exchange rates2. An Apple Watch3 in the US costs $429 while in the UK it is £429, 23% higher. More so British purchasers of the iPad Pro4 fair only marginally better with a 20% price difference. World Economics has been tracking prices of a basket of 50+ goods since 2011 and the big Apple price difference has been present since the June 2016 referendum.
From 2011 to 2016 market prices for the WPI basket of goods were largely consistent showing a close relationship between the FX rate and the price of goods. With the June 2016 referendum a price disconnect became visible with prices and FX rates diverging considerably. From mid-2016 Apple revised it’s pricing for UK consumers to be approximately 23% higher in line with all goods and services at that point. Since mid-2017 the gap between the FX rate and prices has narrowed showing the USD and GBP becoming closer to its natural parity despite the difference in exchange rates. Of the 50+ items in the basket of goods tracked by World Economics, Apple products continue to buck the trend, retaining the 22-23% increase in their prices.
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1. iPhone XR – Black 128mb, Unlocked - US: $799, UK: £799
2. Current GBP to USD FX Rate: $1USD = £0.81
3. Apple Watch Series 4 GPS 44mm, Silver Aluminium, White band – US: $429, UK: £429
4. iPad Pro 12.9” – Silver 512mb, WiFi - US: $1349, UK: £1319
* Prices include local taxes that vary significantly across the countries covered.