The man who pays his way

Greece and Portugal have much in common. Both are proud maritime nations whose influence extends way beyond their shores and islands. The mainland of each occupies the sunny latitudes from 37 to 42 north, which explains the locals' conviviality and the long-lasting British love affair with them. And both are broke.

How do these beautiful, benighted nations respond to their economic woes? According to the Post Office, by hoisting prices for tourists. Its 2012 Holiday Costs Barometer asserts prices have soared by 10 per cent in Portugal and 11 per cent in Greece. Factor in the 8 per cent improvement in the pound against the euro, and the impecunious pair have put up local prices by a fifth.

Have bar owners, shopkeepers and restaurateurs in Corfu and the Algarve really raised profit margins to make up for dwindling visitor numbers? In my experience they have done exactly the opposite, cutting prices to boost business. So I looked into the Post Office's methodology.

The survey is based on a basket of "holiday essentials". Unless a pack of Marlboro Lights is among your daily purchases when abroad, the Post Office's shopping list may not match yours. It gives the same weight to a bottle of sunscreen (which you are unlikely to buy every day) as a cup of coffee (which you might). The Post Office also appears to think you will buy a tube of insect repellent as often as you do a bottle of beer; happy hour could get very messy if you muddle the two.

However odd the survey selection, contrasting prices between countries provides useful information for prospective travellers – so long as they are like-for-like comparisons. In Corfu, says the Post Office, a beer costs €4.50, compared with just €2 in Spain. But before you cross Greece off your holiday wish-list, note that no quantity is specified. From my exhaustive research on the subject, beer in Greece tends to be served in jumbo, thirst-quenching half-litres, while the standard measure in Spain is halved: a measly 250ml, hardly worth getting out of bed for, and unsurprisingly cheaper than that pint in Corfu.

How much was that beer, again? In the Corfiot resort of Sidari this evening, any bartender trying to charge €4.50 for a foaming pint of Mythos (that's Greek beer, not insect repellent) will see all his customers vanish to Shaker's Bar, where the same drink costs €2.

Likewise, the "cup of regular filter coffee" priced by the Post Office at €2.50 is a nonsense: any sensible visitor will sip proper Greek coffee in a kafeneio, and is unlikely to be troubled for more than a euro.

Another element that makes Greece look expensive is the price of a postcard home. Wish you were here? Not with a card and stamp costing €2.80.

As the Post Office no doubt knows, a stamp for a postcard home from the nation which gave the word "philately" – or at least the components from which the term was coined – costs 78 cents. That implies the typical postcard costs a couple of euros. Either postcard robbery is rife in Corfu, or the survey is wide of the postmark.

The smuggler's guide to Europe

Portugal's sharp rise in prices, at least according to the Post Office, is due to the scandalous cost of sun cream: €12.50, three times the price in Spain. Except that the survey does not specify the size of that daily bottle of sunscreen, nor the brand – only the sun protection factor, a very precise SPF15.

The Post Office says its figures are "the lowest average price for commodities supplied by National and Regional Tourist Offices", and are cross-checked by the leading tour operator Cosmos.

Assuming the figures are right, a spot of cross-border trading could stretch your travelling funds: insect repellent in Portugal and mineral water in Italy are both four times more expensive than on Spain's Costa del Sol. Careful, though: while postcards in Dubrovnik are apparently one-30th the price in nearby Corfu, the fact that they show the historic walls of the wrong city may diminish their value.

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