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Cheaper to buy a new phone than recharge its battery?

Friday, 03 November 2017

‘Cheaper to buy a new phone than recharge its battery?’, a headline you would expect to see in the satirical online website the Betoota Advocate crossed our desks this week.

But it wasn’t satire, it was a chart by economists from MLC, reproduced below, comparing electricity price movements to telecommunication equipment and services prices (i.e. mobile phones) from the Consumer Price Index.

3.11.17CheaperToBuyNewPhoneThanRechargeBattery

Since 2007, electricity prices paid by households have risen 126 per cent over the last decade, at an average pace of 8.5 per cent per annum. Over the same period, telecommunication equipment and services with the cost of purchasing phones and making calls has fallen by 13.3 per cent or 1.4 per cent.

They reluctantly seem to think this could be the case: “as strange as this sounds, we could soon be approaching the age where it’s cheaper to buy another phone than recharge the battery.”

While it is seemingly true that the cost of charging your mobile phone is going up, we don’t think that is the point the economists at MLC are trying to make.

The cost of all your electricity usage is on the rise. The subtler take away is that rising electricity prices are eroding the benefits of deflationary pressures such as those traditionally associated with electronic goods reaching scale economies, on consumer prices.

A sad indictment of energy policy in Australia over the last 10 years should this clearly tongue in cheek prediction come true. - Spiro Premetis

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