Smartphone Industry Sees 20% Decrease in Consumer Price Index, Here’s Why They’re Still Expensive

Inflation can be a tough concept to understand, but it is basically just the averaged out prices of a basket of goods and services that people tend to buy. All of these figures are put together to create the Consumer Price Index (CPI), and an increase in a product’s CPI means that it will cost more for people that want to purchase it in the market. Smartphones have actually managed to see a 20% decline in their CPI, but in spite of the fact that this is the case they are more expensive than ever.

Additionally, overall increases in the CPI have been at around 9%, so the gradually declining CPI of smartphones can leave some scratching their heads. With all of that having been said and now out of the way, it is important to note that the CPI is an imperfect metric since it fails to reconcile discounted prices among various other outliers that can inorganically make the CPI lower than it should be.

Indeed, while many smartphone brands have tried to be competitive with their pricing, in most cases they have been compelled to increase the normal retail price of their flagship devices with all things having been considered and taken into account. One contributing factor to the price increases is the use of more advanced components because of the fact that this is the sort of thing that could potentially end up costing more in the long run.

Additionally, the severe shortage of components which was caused by a complicated holdup in the global supply chain has further complicated matters and forced OEMs to increase their prices to cover basic costs and still manage to turn a profit.

A more accurate representation of smartphone prices can be seen in the USA Channel Share Tracker by Counterpoint, which revealed a 20% quarter on quarter increase in retail smartphone prices. Currency devaluation in countries like Japan are raising alarm bells since Apple and other smartphone retailers might increase prices further to mitigate and offset potential losses that might be incurred by rapidly depreciating currencies.

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