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Brexit Affecting Consumer Electronics Prices in the UK

Microsoft have become the latest company to increase their price in the UK. Uncertainty over Britain’s future has seen the pound has fallen in value against the dollar and the euro. Companies doing their accounting in dollars will be affected by the pound’s drop in value. In addition to Microsoft, Amazon, Sonos and Apple have raised the price of hosting services, computers, speakers and app store purchases by up to a quarter.

“We pay for everything we make in US dollars. Over recent months, there has been a significant change on the US dollar to GBP exchange rate. As a result, our existing pricing has become unsustainable and, like many other companies, we have to increase prices for all products priced in GBP.”

The Surface and Surface Book computers are now retailing for £1,449 at the Microsoft Store, an increase of 11.5% on last weeks prices. A top-spec Surface Book costs £400 more. In October 2016 Microsoft also increased their cloud-hosting services price up to 25%. A new MacBook Air is £100 more expensive, a 12″ MacBook increased by £200.

The early confidence of victorious Brexiteers is going to be hit by more rising inflation and weak income growth. The combination of which will hit disposable incomes. Brexit didn’t solve anything immediately. Consumer confidence in the UK has turned negative since the start of 2017. Following several years of very low confidence post-Recession a small bump of optimism emerged during 2015 and 2016. Brexit was what pushed confidence levels below 0 again. The latest results show a reading of -5 for January 2017, this is +2 compared to December 2016 and a better result than a Reuters poll of economists who predicted -8.

The Consumer Price Index tracks inflation and in January 2017 reached 1.8%, up from 1.6% in December. 2% was the Bank of England’s target, economists predicted 1.9%. Although not as high as expected the news is not good. Inflation is expected to rise as the year continues, pushing up the price of imports, of which Britain relies on for a good deal of food. The myriad of indicators suggest rough times ahead for the British economy, as they begin negotiation in March to leave the European Union it is customers who are bearing the brunt of the cost.

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Mathew Sayer

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