By charging more for their products in Britain, Apple Inc. and Electrolux AB responded to the falling pound as the Brexit squeeze on U.K. consumers tightened.
While Sweden’s Electrolux said it’s boosting the prices of its home appliances by 10 percent, Apple quietly raised the cost of some of its machines including the “Mac Pro” by 20 percent overnight.
As the weakest pound in three decades forces up the cost of imports just weeks before Christmas price pressures are likely to mount with inflation already accelerating at the fastest in two years. There was a tussle as supermarket Tesco Plc battle with supplier Unilever over the cost of goods and Microsoft Corp. began charging Britons more for some of its software and the attest price hikes came days after the so called “Marmitegate” or battle between the two.
“We will see more price increases, possibly more at the higher end of the market, and we’ll see a significant squeeze on real incomes and then we’ll see how it plays out,” said Kit Juckes, a London-based strategist at Societe Generale SA.
Up from 2,499 pounds earlier in the week, Apple began charging 2,999 pounds ($3,650) for its “Mac Pro” desktop machine. While the U.S. prices for the Mac Mini and Mac Pro haven’t been changed, the “Mac Mini” now retails at 479 pounds compared to 399 pounds.
“Apple suggests product prices internationally on the basis of several factors, including currency exchange rates, local import laws, business practices, taxes, and the cost of doing business. These factors vary from region to region and over time, such that international prices are not always comparable to U.S. suggested retail prices,” an Apple spokesman said in a statement.
“We need to compensate” for the cheaper pound by raising prices of its goods such as fridges and washing machines, said Electrolux Chief Executive Officer Jonas Samuelson said in a telephone interview.
In a separate incident, as it cut its earnings outlook for the second time since the Brexit vote, British Airways owner IAG SA blamed the pound. Blaming increased costs, the price of Marmite, Unilever’s iconic savory spread at the center of the recent price war with Tesco, was raised by 12.5 percent, Wm Morrison Supermarkets Plc also said very recently while announcing the price hike.
Marking the pound as the worst performing major currency this year, since the U.K. voters chose in June to leave the European Union, it has dropped about 18 percent against the dollar.
And in a level not seen in the U.K. since 2012 and above the Bank of England’s 2 percent target, with some economists forecasting consumer price inflation could reach 3 percent next year that slump is starting to feed through via import prices. He is not indifferent to sterling’s slide, said BOE Governor Mark Carney this week adding that there are limits to policy makers’ willingness to look through an inflation overshoot.
All of three separate reports, prepared by GfK, YouGov and Asda, cited the cheaper pound as weighing on consumer sentiment and these were indicative of the economic cost of higher prices and a weaker sterling.
(Adapted from Bloomberg)
Categories: Economy & Finance