In a move that will further strain British households already grappling with stubborn inflation, Apple has raised prices on its key products by nearly 20% across the UK, while Microsoft has followed suit with a price hike for its Xbox consoles. The technology giants have cited the persistent weakness of the pound and rising component costs as the primary drivers. For the City, this is a textbook case of currency depreciation feeding through to consumer prices.
The pound has lost roughly 15% against the dollar over the past year, making imports from the United States significantly more expensive. Apple’s iPhone 14 Pro Max, for example, now retails at £1,199, up from £1,049. The iPad and MacBook ranges have seen similar jumps.
Meanwhile, the Xbox Series X will cost £479.99, a £30 increase, and the Series S rises to £249.99 from £229.
99. This is not just about gadgets, it is about the broader inflationary psychology that the Bank of England is struggling to contain. Consumers are seeing these price increases and will demand higher wages, perpetuating the wage-price spiral.
The market is now pricing in a peak in interest rates at 4.5%, up from 3% at the start of the year. That will hammer gilt yields and increase the cost of government borrowing, a fiscal headache for the Chancellor.
Capital flight remains a risk, with foreign investors demanding higher premiums to hold UK debt. The silver lining? Perhaps this imported inflation will erode real wages and dampen demand, eventually cooling the economy.
But make no mistake: the immediate pain for the consumer is acute, and the Bank of England’s job just got harder. The market will be watching the next CPI print with unease.
