Which country sells the cheapest iPhone?

introduction
Every year, we track global prices for the latest iPhone, testing the theory of purchasing power parity (PPP). It stipulates that the prices of identical products must be the same in all countries when converted back into dollars. However, this is rarely the case. So how valid is the PPP theory for the iPhone 13, and in which country might it be worth upgrading this year?

introduction

Every year, we track global prices for the latest iPhone, testing the theory of purchasing power parity (PPP). It stipulates that the prices of identical products must be the same in all countries when converted back into dollars. However, this is rarely the case. So how valid is the PPP theory for the iPhone 13, and in which country might it be worth upgrading this year?

A year of rising prices

The macroeconomic landscape has changed significantly since our last publication in October 2020. Rising shipping and energy costs have driven up the price of many goods. The latest iPhone – the 13 – is no different. Its price in the United States is $50 more than the equivalent iPhone 12. That’s up 6.7%, probably fair given US inflation. With an average sales tax of 8%, the total cost of an iPhone 13 in the US is now $863.

After converting local prices to USD, only in Japan can you find a cheaper iPhone (Table 1). By contrast, buying the same model from an Apple store in Brazil will cost you $1,354, a premium of 57%! This ranks Brazil number one – up from 22n/a last year, when the iPhone 11 was only 15% too expensive. With only Greece down, four of the top five countries have become relatively more expensive since our last update.

The biggest driver, however, is Turkey. Since October 2020, the lira has depreciated by 79%, taking it from the most expensive country to buy an iPhone to one of the cheapest. And, by waiving sales tax, import duties, and shipping costs, iPhone customers in Turkey get the best value, paying $697!

For most countries, the removal of taxes, duties, and shipping costs can account for the majority of the iPhone price gap. In India, where these costs are particularly high, the adjusted price ends up being 11% cheaper than in the United States. Meanwhile, in South Africa, Apple is charging customers almost 30% more for its latest iPhone. This penalty has doubled since iPhone 11, which may be partly due to the 6.6% appreciation of the rand.

Conclusion

US customers still enjoy the best iPhone prices in the world. If they flew to Japan, they might get it cheaper, but only if they could get a refund for the trip! That said, customers in Turkey, India, and South Korea shouldn’t feel shortchanged. When adjusting transportation costs, they get a lot.

This is not the case for iPhone buyers in Brazil. Even after adjusting for inflation, customers are paying almost 50% more than for an iPhone 11! And they pay 24% more for the same iPhone compared to US customers.

And the next iPhone? Well, with prices linked to currency movements, we may see the 2022 iPhone getting relatively more expensive in New Zealand, Australia, Canada, and Turkey. On the other end, customers in Taiwan, South Africa, China, and Switzerland may want to refrain from buying the iPhone 13 and wait for the iPhone 14 (?!), because those currencies are all expected to be the worst performers over the next 12 years. month.

Sam van de Schootbrugge is a macro-economist taking a one-year industrial break after his PhD. in economy. He has 2 years of government work experience and holds a Masters degree in Economic Research from the University of Cambridge. His research expertise is in international finance, macroeconomics and fiscal policy.

(The commentary in the above article does not constitute an offer or solicitation, or a recommendation to implement or liquidate any investment or to engage in any other transaction. It should not be relied upon as the basis for any decision investment or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

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