Fun is cheaper – but don’t get caught out at Christmas

‘Fun is cheap’ in the UK as prices remain virtually unchanged over a decade despite the overall cost of living soaring by nearly a third, Egg’s Retail Therapy Index (RTI) reveals.

While average UK prices have increased by 30.2% over the last decade according to the Retail Price Index (RPI), Egg’s Retail Therapy Index found that the price of ‘fun’ items – leisure and entertainment goods - has decreased by 0.6% during the same period.

Egg’s RTI measures a basket of goods and services designed to reflect the nation’s lifestyle purchases. And while the Government’s Retail Price Index has been driven upwards by 3% in the last twelve months, mainly through rising fuel and energy costs, fierce competition among stores and particularly the major supermarkets has meant that prices in the market for recreational and leisure items as measured by the RTI have only risen by 0.9%.

Christmas bargains – if you are careful

However, analysis of the detail reveals some startling rises and falls which will help shoppers in the run-up to Christmas. The cost of audio-visual equipment such as iPods, televisions and sound systems has fallen by 10.9% over the past twelve months, while the average cost of buying books and newspapers has risen by 6.4%.

And the most striking change has been seen in the average price of CDs. Comparing year-on-year the average cost of Top 10 chart CDs has fallen 23.4%. However, in the three months to end-September 2006, the average cost has sneaked up 14.4%. Shoppers are advised to hang on for bargains in the final weeks before Christmas as stores discount heavily.

Alison Wright, Chief Marketing Officer at Egg, said: “Christmas is a time for giving but shoppers need to make sure they don’t give themselves financial headaches for the New Year by overdoing the spending. Our Retail Therapy Index reveals that over the past decade, the price of ‘fun,’ as in recreational and leisure products and services, has grown by less than one per cent, while overall prices have increased by almost a third. Savvy shoppers can have a very Merry Christmas without breaking the bank.

“’Fun is cheap’ is good news for Christmas shoppers. But not everything is as inexpensive as it might be. If you’re buying presents, it makes sense to wait and see how much will be discounted. We’d urge people to be money-smart in the shops.”

Supermarkets and Online competition

Supermarkets moving into the lucrative children’s toy market and taking on independent retailers has contributed to a 4.2% fall in prices in the last 12 months.

The price of consumables such as newspapers, tobacco and cigarettes has risen significantly (5.6%) over the last year according to Egg’s Retail Therapy Index. Incontrast, the price of goods in sectors experiencing significant price competition from supermarkets and the internet has fallen significantly. Online price comparison sites and fierce competition between retailers has led the price of electrical appliances to fall 2.2% in just 12 months.

Music and electrical

In the last three months CD prices have increased by 14.4%. It is anticipated they will fall significantly in the run up to Christmas and New Year as retailers extensively discount CDs. The cost of the hardware for playing music has also fallen, with a 30gb iPod now 13.7% cheaper than it was just three months ago.

Alison Wright continues: “The biggest price fallers are products in categories where there is intense competition involving supermarket or online retailers, such as the market for audio-visual equipment. Egg is urging consumers to shop around for the best deal and to manage their money more effectively as there are huge changes in the price of consumer goods in as little as three months.”