Following reports of insanely expensive iPhones in Brazil, we stopped by an Apple vendor in São Paulo to see for ourselves.

It's no joke.

A 64 gigabyte iPhone 5S costs 3,599 reais, or about $1,637, making it the most expensive iPhone in the world. The same product costs $849 out of contract in the U.S. — still expensive, but only around half as much.

A 16 gigabyte iPhone 5s costs 2,799 reais, or about $1,275. Michael Kelley/Business Insider

*Brazil's ludicrous prices, which extend beyond Apple products, can be attributed to transportation bottlenecks, protectionist policies, a history of high inflation, a dysfunctional tax system and an overvalued currency.

The Apple reseller we went to in São Paulo is located in the Bourbon shopping center, an upscale mall across the street from a hotel called "The American Loft." It's called iPlaces, and there are other locations all over the city.

We didn't see anyone buy an iPhone 5s or iMac (before we were kicked out for taking pictures), but the store seems to get a lot of foot traffic.

Brazil is in the top 10 smartphone markets with almost 50 million users, so the demand is there. Nevertheless, the iPhone 5S (which costs 2,799 reais / $1,274 for the cheapest model) is way too expensive for most people in a country where the average wage is about 2,000 reais / $910 per month.



Now for more shocking Apple prices:

An iMac with 3.4 gigahertz costs about $4,320 in Brazil versus $1,999 in the U.S.

about $4,320 in Brazil versus $1,999 in the U.S. Apple TV costs $181 in Brazil versus $99 in the U.S.

Earbuds cost $67 versus $29 in the U.S.

A 16 GB iPad Mini with retina display and WiFi costs $681 and about $299 in the U.S.

A 13-inch MacBook Air (256 GB) run s $2,455 in Brazil versus $1,299 in the U.S.

A standard 13-inch MacBook Air (128GB) costs $2,091in São Paulo. Michael Kelley/Business Insider

*Editor's note:

São Paulo resident Roberto Macedo sent us a note in response to the article, and we have published part of it below with light editing:

"Forget about transportation bottlenecks, protectionist policies, a history of high inflation, a dysfunctional tax system and currency, all of that would make at worst case scenario a price 50% higher. There is something else beyond 'Brazil Cost,' there is the 'Brazil's Profit' (Lucro Brasil).

What is Brazil's Profit? It is the price that Brazillians pay for something just because it is expensive. Why sell for a lower price if you can sell all your production at a higher price? This started with the crazy coin fluctuation in the early '90s. All companies got used to setting the price fairly high so as not to lose money on overnight coin rate changes. After Real currency, the fluctuation ended, but the prices stayed on the upper side, with high margins, and companies saw that people kept buying. Check car prices for instance. Brazil's profit rate is about double the rest of world.

Most Brazilian people aren't critics and don't engage even with they believe that something isn’t fair. This applies to prices as well, and with the long-term culture that something high-tech or a new car is a social status indicator, I know that this exists in the whole world, but maybe not like here in Brazil."