Apple cuts the price of new iPhones as Reserve Bank battles inflation

Amid a war of words between RBA governor Michele Bullock and Jim Chalmers over inflation, Apple has shaved up to $100 off the price of its iPhones.

Apple has eschewed price rises across its most popular products as it looks to revive sluggish iPhone sales.

The $US3.4 trillion tech giant paused hikes across its new Apple Watch Series 10 and AirPod’s range, while cutting the price of its flagship iPhone 16 Pro by $50 compared with last year’s model, while its standard iPhone 16 was $100 cheaper.

The move comes as Reserve Bank governor Michele Bullock battles to rein in price rises, saying inflation is still high as she faces criticism by Jim Chalmers and his mentor, Labor president Wayne Swan, that she is “smashing the economy” via aggressive interest rate hikes.

Telecommunications has been a pain point – helping keep services inflation sticky – after Telstra hiked prices for its mobile plans by as much as 11 per cent. Optus, Australia’s second-biggest telco, has lifted the price of some mobile plans by about 5 per cent — the first hike since July, 2022.

Investors were eagerly anticipating Apple’s “It’s Glowtime” event at its headquarters in Cupertino, California early Tuesday morning (Australian time), when it released its latest iPhone models, watches and headphones.

In the three months to June, iPhone sales eased 1 per cent compared with the previous corresponding period to $US39.3bn, continuing their slump.

While the iPhone 16 looks largely the same as the previous model, Apple CEO Tim Cook said it had been redesigned ‘from the ground up’ for the AI era.

iPhone sales account for more than half of Apple’s business and if it were its own division would be the 15th biggest company on the S&P 500 – even after revenue last financial year dipped 2.4 per cent to $US200.6bn. iPhone sales alone outrank the overall revenue of General Motors ($US178.1bn) and Ford ($US180.3bn).

And Apple is borrowing a common sales tactic from the auto industry to entice people to upgrade: offering trade-ins.

Apple’s vice president of marketing Kaiann Drance said the company’s smartphones were not disposable, offering “exceptional durability, longevity and software updates”.

The iPhone 16 Pro.

“iPhone holds its value longer than other smartphones, which means it's easier to benefit from iPhone trade-in offers from Apple and our partners, including up to $US800 in the US when you trade in an iPhone 12 or newer (model),” Ms Drance said.

In Australia, consumers can get up to a $1125 credit if they trade in an iPhone 15 Pro Max, and if they have an eight-year-old iPhone 7 Plus, they can get a $65 credit.

It is expected that many people will upgrade their phones this year, after 2021 recorded strong sales – with revenue totalling $US192bn, a 71 per cent surge on 2020 – and the usual three-year upgrade cycle for smartphones.

But the design of the iPhone 16 looks largely unchanged from the previous model – a potential hurdle as Australians tightened spending amid the cost of living crisis, and the fact that the iPhone 16 is priced from $1399.

Apple chief executive Tim Cook said, however, that the new phones – which are equipped with faster chips – had been “built from the ground up” to perform more artificial intelligence-powered tasks. This is hoped to make the company more competitive against its smartphone rivals Samsung and Google, which introduced AI features into their devices earlier this year.

“The innovation and invention these products deliver will continue to deepen the meaningful impact they have on all of our lives. I’m proud of our teams and what they’ve accomplished,” Mr Cook said.

The author travelled to Cupertino as a guest of Apple.

Originally published as Apple cuts the price of new iPhones as Reserve Bank battles inflation