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Discount IPhone $28 Cheaper in Australia Than Original

Apple Inc. (AAPL)’s new iPhone 5c, aimed at a broader range of customers with a lower price, will cost almost as much in Australia as the iPhone 5 amid a 10 percent fall in the local currency that’s lifting the cost of imports.

The brightly-colored 5c model will sell for A$869 ($808) with 32 gigabytes of memory when it makes its global debut in Australian stores Sept. 20, according to an e-mailed statement from the Cupertino, California-based company today. The iPhone 5 cost A$899 with the same memory capacity in Australia when it went on sale for the first time last September.

The so-called Aussie has fallen about 10 percent in 2013 as a waning resources boom cuts investment in mines and petroleum projects, while the Reserve Bank of Australia’s attempts to stoke a slowing economy by reducing interest rates to a record-low 2.5 percent have weakened appetite for Australian dollar debt. In the U.S., the 32-gigabyte iPhone 5c will cost $649 off contract, about $100 less than the $749 price of the iPhone 5.

The weaker dollar is “bad for the Australian consumer,” said Alex Joiner, an economist at Bank of America Corp.’s Merrill Lynch unit in Melbourne. “Retail prices can only go one way. Shopping online gets more expensive, going overseas gets more expensive.”

Alex Waldron, a Sydney-based Apple spokesman, declined to comment on pricing.

Squeeze Profits

Australian retailers face a 5 percent increase in the cost of imported goods after the Australian dollar fell below 90 U.S. cents on July 31 for the first time since 2010, according to Merrill Lynch. That may squeeze profits amid weak consumer spending, according to the bank.

The price of electronic goods fell particularly sharply when the Aussie was above parity with the U.S. dollar, Joiner said, helping constrain inflation as prices of flat-screen televisions dropped by more than 20 percent. “That’s not going to happen if the currency stays where it is,” he said.

Apple’s Australian managing director Tony King was summoned to testify before a parliamentary panel in March as part of an inquiry into the cost of software and hardware products in the country.

He blamed licensing and performance rights issues for higher prices in Apple’s Australian iTunes store, where Rihanna’s “Unapologetic” album was retailing for about 50 percent more than in the U.S. version of the store at the time of the inquiry.

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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