Having fun is becoming cheaper

Wednesday, Dec 06, 2006 9:7AM CST

By Jennifer Hill

LONDON (Reuters) - Those who need an excuse to enjoy themselves this festive season now have a very good one: having fun has become cheaper, while day-to-day living expenses have rocketed.

The "cost of fun" has fallen over the past decade, while the cost of living has soared almost a third, according to new figures.

Egg's "retail therapy index" (RTI) -- which measures a basket of goods and services reflecting the nation's lifestyle -- said the price of "fun" items, such as leisure and entertainment goods, has fallen by 0.6 percent in the past 10 years.

At the same time, average UK prices have increased by 30.2 percent, based on the Retail Price Index (RPI).

In the past year alone, RPI has lifted 3 percent, driven by rising fuel and energy costs.

But fierce competition among retailers -- supermarkets in particular -- has meant the price of recreational and leisure items, as measured by Egg's RTI, have risen by just 0.9 percent.

Some items have seen startling price drops.

The cost of audio-visual equipment, such as iPods, televisions and sound systems, has tumbled 10.9 percent over the past 12 months.

The price of toys, photographic and sports goods has dropped 4.2 percent as supermarkets take on independent retailers, while electrical appliances now cost 2.2 percent less than they did a year ago, due to online price comparison sites pushing prices lower.

However, some items have seen inflation-busting price rises.

Books and newspapers have increased in price the most -- up 6.4 percent since this time last year, according to the analysis undertaken by the Center for Economics and Business Research.

Tobacco is up 5.7 percent, while cigarettes now cost 5.5 percent more.

In the past three months, CDs have seen the most striking change in fortunes.

While the average price of top 10 chart CDs has fallen 23.4 percent year-on-year, the cost rose 14.4 percent in the third quarter of 2006.

Shoppers should hold out for bargains in the final weeks before Christmas, as stores heavily discount goods, said Egg.

Chief marketing officer Alison Wright said: "'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."