Letter: Retail price myths

Sir: Your view on competition in "Volvo has seen that British consumers are no longer dummies" (Review, 10 July) understates the extent of competition in the UK and perpetuates familiar myths.

Comparing retail prices between the US and Europe is a poor measure of competitiveness. The sheer scale of the US market delivers economies that are reflected in lower retail prices. And Americans have eight times as much storespace to shop in as Europeans.

Other factors account for the price differences, including sales tax, wage costs, retail costs and distribution costs, as well as the cost of packing and marketing to so many countries with different languages and cultures.

When Europe has 5 per cent VAT, lower national insurance, cheaper fuel and reduced retail rents, US and European retail prices will begin to converge.

JOHN NOBLE

Director, The British Brands Group

London W1