How much have Macs, iPads, iPhones, etc. increased since Brexit? And how do UK Apple price changes compare to the US?
Apple has recently increased prices in the UK to reflect to drop in the value of the pound since Brexit. While FX rates change constantly, by March 2017 the pound has lost nearly 20% against the dollar since the vote on 23 June 2016. As an American company reporting profits in U.S. dollars, Apple increased the pound prices of its UK products, in order to protect their bottom line. How much more will you pay now for an iPad, iPhone, MacBook Air, or iTunes app as a result of Brexit?
How much have Apple Prices Increased?
In October 2016, Apple increased prices on many products in the UK between 5% and 35%, to reflect changes in the GBP/USD exchange rate. We've analyzed the prices of many popular Apple products to understand the full effects of post-Brexit foreign exchange conditions. The table below shows a number of Apple's pre-Brexit and current prices, as well as the percentage increase. Note these are Recommended Retail Prices, so you may find some of these products available for a bit less at some retailers (e.g., John Lewis).
|Current Models||Pre-Brexit Price||Post-Brexit Price||Percent Increase|
|Apple TV, 64 GB||£169||£179||5.9%|
|iPad Pro, 12.9"||£679||£729||7.4%|
|Apple TV, 32GB||£129||£139||7.8%|
|13-Inch MacBook Air, 256 GB||£999||£1,099||10.0%|
|iPad Pro, 9.7"||£499||£549||10.0%|
|13-inch MacBook Air, 128 GB||£849||£949||11.8%|
|iTunes Tier 1 App Price||£0.79||£0.99||25.3%|
|iPhone SE Leather Case||£29||£39||34.5%|
To be clear, these price increases occurred on existing, static products. That is, the products didn't change, but the prices did - consumers received the same products with the same features and specs, but for an increased price. In a world of constantly evolving technology, product prices usually drift down, not up. We are paying more for our Apple products as a direct consequence of Brexit.
What about iPhone and Apple Watch?
You'll notice that the iPhone and Apple Watch were excluded from the price-change table above. Why? Prices of iPhones and Watches did increase, but coinciding with new model releases (iPhone 7 and Watch Series 2, respectively). We can't, at first glance, separate out how much of the price increase is due to FX conditions and how much is due to the advanced technology and improved specs of newer models. As a result, we cannot initially claim an x% increase in iPhone and iWatch prices due to FX alone. However, it is worth noting that the prices of the "latest" base models went from £539 (iPhone 6) to £599 (iPhone 7), and £269 (Apple Watch Series 1) to £369 (Apple Watch Series 2), increases of 11% and 37%, respectively.
That said, we looked at new-release prices in the US to get a better understanding of the UK price changes. US prices of new models by and large stayed consistent with previous models, despite improved specs and technology. That implies that the price increases on the latest phone and watches in the UK are mostly due to the currency situation. The chart below shows the percentage price increase for a selection of products that have issued a new model release since Brexit (e.g., iPhone 6 to iPhone 7, Apple Watch Series 1 to Series 2). You'll notice that all UK new models were accompanied by a price increase, whereas in the US only the 5.5" iPhone increased in price with the new model (i.e., iPhone 6 to iPhone 7).
Coming up on a year after the Brexit vote, Apple is just one of many international companies to raise UK prices. Assuming that the companies supplying our products want to maintain the same profit margins, we will see more and more of this. The question is, will we see wage inflation to cover these higher costs to the UK consumer?