The value of a nation’s currency is readily observable by looking at how it trades with other currencies, but what that price actually means for the people in any nation depends on the “value” the money will buy.
So economists have a somewhat esoteric term, purchasing price parity (PPP), to try and cut through financial market noise to find the “real” value of a currency. But because the concept is so hopelessly inaccessible for most people, the Economist magazine came up with the “Big Mac Index”, comparing the prices of the ubiquitous McDonald’s burger around the globe to establish a real world version of a currency’s value based on the theory of “same good, same price”.
However, life and technology moves on, so while McDonald’s is still one of the globe’s most recognisable brands, Apple’s iPads and iPhones are now ubiquitous consumer staples.
CommSec chief economist Craig James and his team first noticed this back in 2007 and began compiling an iPod index. It’s since morphed into an iPad and iPhone index. Both indices tell us that, due to currency fluctuations, there is a big range in the US dollar price consumers have to pay for goods.
Take the 16GB iPhone 6 plus as an example. At just $US734.49, Malaysia is the cheapest place to buy it. But, if you are unfortunate enough to live in Israel the price is about 50% more expensive, in US terms, at $US1,142.89. It’s not much cheaper in Barbados, Guatamala or Turkey.
But an iPhone 6 plus is currently really cheap in Australia, which is the 5th cheapest at US$793.84. New Zealand is the third cheapest at $US785.63.
What does that tell you? Maybe the Aussie and Kiwi dollars are undervalued at the moment. Or perhaps, iPhone prices are about to go up.
Here is the full list of countries and prices that CommSec surveys with the US price as the baseline.
And when it comes to the iPad Air 2 16GB, Malaysia is again cheapest at $US398.26, with Australia not far behind at $US427.66. At the other extreme, Argentinians pay the equivalent of $US1500.32. Ouch.
Here’s that table too.
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