Fairly interesting...

From an article in The Daily Mail a few weeks ago:

Consumers are being hit by a 'postcode lottery' in the cost of buying goods, with some paying at least £500 more for exactly the same items. A study of the prices of 200 items at 12 different locations nationwide revealed that some shoppers are being ripped off and paying up to £537 more than in other areas. Researchers compared the cost of electrical products, homeware, stationery, toys and entertainment.

The average cost of the 200 items came to £15,508 in Swindon, in Wiltshire, and £14,971 in London. Swindon was the most expensive shopping destination in the country with prices £171 above the national average, website Kelkoo discovered.

In Wrexham, north Wales, and Peterborough, Cambridgeshire, customers were paying £164 and £148 above average. Remarkably London, despite its high cost of living, has the cheapest retail prices in the country, with the goods costing £366 less than the average, according to the report. The cost of electrical goods alone was £445 lower in London than it was in Wrexham...

Now, we don't know how rigorous the research was, and it appears to have been carried out by a price comparison website called Kelkoo (who have a vested interest in getting people online to shop around), but it's interesting nonetheless, as it illustrates, yet again, that competition drives prices down. Very crudely speaking, the bigger and less isolated the town, the cheaper things are in the shops.

But remember: this generalisation only applies to physical goods which are both produced and consumed a long distance from the actual point of sale, and which are traded all across the globe. Services, and goods consumed at point of use - i.e. a cup of coffee, a beer, a tank of petrol - are very much more expensive in London because you are paying a lot of embedded rent.