The end of bargain prices

Searching out bargain prices used to be one of life’s pleasures for British consumers. I’ll cheerfully admit myself going into John Lewis in the Vic Centre, spending an age sussing out a Nikon digi camera, and then wandering up Parliament Street to camera shop Jessops (an outfit that was struggling so badly it would almost pay you to borrow money) and buying it for less.
But the era of cheap looks like it’s over – in all sorts of ways.
We all know how much petrol prices are rising. In February I bought a little Honda hatchback from Evans Halshaw in Mansfield because it has a particularly economical petrol engine. Back then, it cost me £38 to fill it up. When my wife shelled out on a tankful last Thursday they swiped her debit card for £45.
That is shattering inflation, and it tells you why the Bank of England didn’t cut interest rates last week.
It’s oil and interest rates that are at the heart of the rising prices that make your take-home pay seem like it’s shrunk in the wash.
Whether it’s fuelling transport or lubricating factories, oil is an unavoidable cost for business, one that feeds through to so many prices that you and I pay.
In Saturday’s Post, you might have seen my colleague Sarah Gillett’s analysis of the impact exchange rates and oil prices rises have had on low-cost trips abroad. Basically, they’re not low-cost anymore (one reason why Center Parcs’ Sherwood Forest holiday village is expected to be very busy this year).
Interest rates determine the fee you pay when you borrow money from the bank or building society. Thanks to the credit crunch, banks are still scared to lend to each other, so even though interest rates are lower than they were, the banks will still make you pay more to borrow their precious cash.
This is why house prices are falling – mortgages are much more expensive.
But it wasn’t just cheap money that made so much so affordable.
Clothes and electrical goods (like that camera of mine) were also affordable because they were made cheaply in places like China.
Well, the world and his uncle have since cottoned on to how cheap it is to make things in China, the Chinese have put their prices up, and things ain’t quite so cheap anymore.
What does this all mean? I reckon it means the end of an era. People will still look for cheap prices, but the smart consumer is one who finds not necessarily the lowest price but the best value.
In other words, something that isn’t necessarily the cheapest upfront, but does the job well and lasts a long time.
Remember that cheap clothes that last only five minutes aren’t cheap at all; that a camera with a low price but high megapixels probably has a cheap processor inside it; that the days of moving house to make money are gone.
Remember, too, that there’s a lot to be said for saving fuel right now. That’s why I’m the one in the Honda crawling along the A60 at 30mph…