Unintended Consequences – How the weak pound will push up guitar prices.
We have had Marmite-gate where a standoff between Unilever and Tesco over a 10% price hike for our beloved Marmite left Unilever with egg on its face and Tesco being praised as the unlikely champion of the consumer. But love it or hate it a 10% hike in the price of Marmite is small change compared to a 10% price hike for a US made Gibson or a 20% price hike for a Chinese made Squier. This is one of the unintended consequences of the Brexit vote where the impact of the weak pound will push up guitar prices.
But why would Brexit have an impact on the price of our guitars?
One of the immediate impacts of the Brexit vote was a tumble in the value of sterling. Immediately after the vote the pound slumped to a 31 year low, a level from which it hasn’t really recovered. This is all very good if you are a UK business, that exports to the rest of the world, as your goods have become, almost overnight, significantly cheaper. However, if you import goods into the UK then the weak pound is really a big problem. The weak pound means that you get fewer dollars, euros or Yuan for your money. If you are buying goods priced in Dollars or Euros or Yuan because a pound now is worth less means that the goods you want to buy have suddenly become a lot more expensive.
So how does this impact us as guitarists?
Well most of the guitars that we purchase are imported. In terms of high end brands like Fender and Gibson they may come from the US or, as is the case for cheaper instruments, many are produced in the Far East in countries such as China and Vietnam. Because they are made abroad and are then imported into the UK the weak pound will push up the price of guitars. Even if you are a guitar manufacturer based in the UK, and there are not many, you will be importing raw materials such as wood which again will be priced in a foreign currency so will have got a lot more expensive.
But guitar prices have been fairly stable over recent years and they haven’t changed much since Brexit.
This is certainly the case but it is also true that because guitar prices have been so stable over the last few years the rapid increase that will feed through over the coming months will be all the more noticeable. There are already reports that retailers are being faced with double digit increases on the list prices of big name guitar brands like Fender and Gibson. But it is not just the big names that are pushing up their prices. Guitars coming in from Europe and China are also seeing big price hikes in response to the weak pound. The good news is that these price rises have not yet reached the High Street. With Christmas fast approaching retailers are holding their prices down to entice the Christmas shoppers. However, it is suggested that come the New Year we should prepare ourselves for the inevitable – The weak pound will push up guitar prices.
Thanks very much Brexit!