A traditional Argentinian song says that the Latin American country has the longest street and the widest river in the world. Singer Gustavo Cordera could now add a new superlative to that list: the most expensive iPad. The last version of the tablet made by Apple Inc. (NASDAQ:AAPL) sells in Argentina for $1,094, more than double its price in the U.S., where it is sold for $499 (not including tax).
Argentina tops the iPad index 2013 by Australian consultancy CommSec, which compares the global prices of the last-generation 16GB Wi-Fi iPad. After accounting for the exchange rate, the Latin American country has by far the highest price, followed distantly by neighboring Brazil ($791). Denmark logs in third, selling the Apple tablet for the equivalent of $725 a pop.
On the other end of the list, Malaysia stands out as the cheapest place in the world to buy an iPad, at $474. Canada and the U.S. are next, pricing the tablet at $485 and $499, respectively, not including tax (normally between 9 percent and 15 percent, depending on the U.S. state or Canadian province).
The low prices in the U.S. have been an incentive for many tourists to purchase Apple devices while visiting. And many retailers take advantage of that. New York-based technology retail giant B&H offers services in both Spanish and Portuguese, both in-store and through its website, catering especially to Latin American buyers. It even has a dedicated Brazil site.
CommSec has been using Apple products as an index for global prices since 2007, when it started the iPod index, later converted to the iPad index. Similar to the Big Mac index by British magazine The Economist, it is used to measure inflation and a currency’s purchasing power around the world.
“The same good -- in this case the iPad -- should basically trade for exactly the same price around the world once exchange rates are taken into account,” said CommSec Chief Economist Craig James in the presentation of the research. According to this logic, the currency of a country where goods are cheaper should get stronger as foreign citizens demand it more to take advantage of favorable exchange rates.
However, restrictions placed on imports, high logistical costs and interventionist policies come into play. Argentina, for instance, can blame part of the high price of the device on a 16 percent import tax, plus 10 percent VAT tax. And with inflation currently at 10 percent, the $1,000 price tag could even be considered a good deal.