Apple CEO Tim Cook attends the grand opening event of the new Apple Store in The Grove on November 19, 2021 in Los Angeles, California.
Mario Tama | Getty Images
Apple CEO Tim Cook said the company is experiencing inflationary pressures in an interview with CNBC’s Julia Boorstin on Thursday, when the company reported nearly $ 124 billion in sales in the December quarter.
“We’re trying to price our products for the value we deliver, and we’re experiencing inflationary pressures,” Cook said. “I think everyone sees inflationary pressures. There are no two ways to do it.”
The observation from the leader of the country’s most valuable company comes as the Biden administration and the Federal Reserve struggle with questions about how to tame rising inflation and whether to raise interest rates.
The consumer price index, a metric measure of price increases across a basket of consumer goods, rose 7% in December from a year earlier, the fastest annual pace in nearly 40 years.
On an earnings call with analysts, Cook expanded on how inflation affects Apple’s business, giving an example of shipping costs.
“We see inflation, and it’s reflected in our gross margin and operating costs [Apple CFO] Luca [Maestri] reviewed with you earlier, “Cook said.” Logistics, as I mentioned on a previous call, are very high in terms of the cost of moving things around. “
Cook said he hoped the increased costs would be temporary.
“I hope at least part of it is transient, but the world has changed and we will see,” Cook said.
Inflation has not hurt Apple’s business, which reported rising gross margins in the December quarter, and Apple has not raised prices in response to US inflation. Cook did not rule out the possibility of price increases in his interview with CNBC or on Apple’s earnings call.
Cook also said he expects supply chain constraints, which contribute to inflation, will ease for Apple in the coming months.
In September, Nikkei Asia reported that chip prices were rising at TSMC, Apple’s chip maker, and that technology companies could decide to pass on the increases to customers. On Thursday, Cook said that “we’re okay with the leading things,” referring to the delivery of the processors that TSMC manufactures.
Apple does not often raise prices after products are released, though it does sometimes in response to regional economic conditions. For example, last year Apple raised prices in their online Apple store in Turkey as the lira fell in value and inflation in the country peaked in two decades.
However, Apple sometimes raises prices compared to last year’s models when they introduce new iPhones and other devices this fall.