Financial institution CommSec recently published an interesting global retailing index called the iPad Index.
The index ranks the cost of a buying an Apple Air 16 GB wi-fi iPad in 51 different countries converted into US dollars at prevailing exchange rates, mirroring The Economist’s much more famous Big Mac index.
The latest iPad Index shows Australia slipped from 4th cheapest country to purchase the popular computer tablet in September last year to 13th on the latest list – still (surprisingly) one of the cheapest places in the world to buy the gadget.
The fall down the list reflects a decision by Apple to lift local pricing rather than currency fluctuations – the Australian dollar was around 94 US cents when the index was compiled, hardly changed from an exchange rate of 94.3 US cents in September last year.
Malaysia at $494 is actually the cheapest place for Australians to buy an iPad, saving you around US$68 off the Australian price ($562). Canada and Japan both add sales taxes to their purchases, pushing their iPad prices well above $500.
As the index shows, you certainly wouldn’t want to buy an iPad while visiting Brazil for this year’s Fifa World Cup while much of Europe is also a no-go zone for cheap iPad purchases, mainly because of high taxes.
Alternatively, if you’re a Kiwi heading over to Australia for the Bledisloe Cup, you could save yourselves around $90 by purchasing an iPad over here.
Even if you’re not planning any overseas trips, the fall in Australia’s iPad Index ranking is interesting for a number of reasons:
Firstly, it could be interpreted to reflect Apple’s gouging of its Australian customers at the same time as its also gouges those who purchase songs and movies on iTunes (ABC show The Checkout highlighted this recently and provided a way around it), whilst gouging the Australian Tax office by shifting all of its taxable profits offshore. If you’re not feeling the Apple love, perhaps a Samsung or Google Nexus device will do instead.
Secondly, in the word’s of CommSec chief economist Craig James the index reflects why “on-line shopping sites and the power of travel are putting pressure on Australia retailers to remain competitive”. “If local pricing isn’t responsive to exchange rate changes then Aussie shoppers will increasingly look overseas to purchase imported items,” James says.
Thirdly, for investors, the current index could be interpreted to mean that the Australian dollar is overvalued if you compare it with the cost of an iPad in California ($543) but undervalued if you compare it with what it costs in China ($578) where all iPads are manufactured.
Fourthly, the higher price may also reflect higher Australian freight costs, tariffs and mark-ups.
So it’s a useful index both for retailers who want to remain competitive and for consumers, if they’re planning a holiday in the coming months and want to upgrade their tablet.
Alternatively, if you’ve got a friend visiting from Argentina or Brazil or Europe, a visit to an Australian Apple store might be a good suggestion.