iPod Pricey in Australia even as Parity Looms

With the U.S. dollar continually being hit by talk of more quantitative easing, the purchasing power of many Asian economies is increasing on an almost daily basis.

New iPod Nano
Source: apple.com
New iPod Nano

Even so, Australian retailers however don’t seem to be passing on the recent savings brought on by a rising Aussie dollar, according to CommSec’s iPod index.

Similar to The Economist’s Big Mac Index, the iPod index compares the cost of buying an 8 gigabyte iPod Nano across 32 different countries.

Despite the Aussie dollar hitting a record high of $99.18 against the greenback last week, Australia remains the fifth most expensive country to buy an iPod Nano, at US$177.59.

This is a marked difference from October 2008 and December 2009, when Australia was the cheapest place to buy the popular media player.

Indonesia ranks the cheapest, with the device costing US$150.31, closely followed by Vietnam, where buying the media player in Dong, translates to US$151.21. (Click here to see full list)

According to CommSec's Chief Economist Craig James, the change in Australia’s relative position reflects the appreciation of the Australian dollar as well as Apple’s reluctance to change local pricing.

"The important point is that local retailers and suppliers face the same dilemma as Apple – when currencies change, how quickly should local pricing change? And if you do change selling prices, do you fully adjust for the currency impact?" James said.

“There is a range of influences that play a part in the decision, including a judgement about whether the currency change is likely to be permanent or temporary.”

Mr James said consumers are now less likely to wait for retailers to pass on savings, instead jumping online to take advantage of the weakening U.S. Dollar.

And Australian consumers, in particular, are expected to flood the online boutiques, with several economists expecting the Aussie dollar to soon reach parity with the greenback.

CommSec expects this to happen by the end of the March quarter next year.