Sterling malaise leads to Microsoft increasing enterprise prices
The pound’s plunge means that software giant Microsoft will increase prices of enterprise software and cloud services from next year.
Although consumers pricing will not be adjusted by Microsoft, the company revealed on one its own blog posts that from 1 January it will raise prices by 13 per cent to enterprises.
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Following Britain’s decision to leave the EU, sterling had the largest ever one-day fall against the dollar.
Since then, lowered interest rates and uncertainty over the Britain’s economic future in the wake of the Brexit vote have plagued the pound taking it lows not seen for many years.
Earlier this month, Tesco was forced into withdrawing a number of Unilever lines following a spat over prices. Unilever was reported as wanting to increase prices in order to preserve profit margins.
Meanwhile last week, spirits giant Pernod Ricard said that it may have to “adjust” some its UK prices following sterling’s slump.
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Sterling’s weakening means that profit margins for importers are squeezed. Because the pound is worth less in foreign currency terms it effectively means that – unless they change their prices – importers are selling for a lower price when translated back into their local currency.
With some importers raising prices, the UK companies that buy goods from them are also adversely impacted. They either have to absorb the increased cost and see their own profit margins squeezed, or pass the increased price onto consumers.