Cheapest holiday spot in Europe where wine costs £2

·2 min read

The Algarve is one of the cheapest places to buy a coffee or a glass of wine on holiday, a Post Office survey reveals.

Falls in the value of sterling against many other currencies and rises in resort prices mean the cost of typical tourist items are higher in four out of five popular resorts and cities compared with a year ago, according to Post Office Travel Money.

But prices have fallen year-on-year in six of the 10 cheapest destinations.

The annual Holiday Money Report, which surveyed 40 destinations, found that UK holidaymakers are paying more for expenses such as meals, snacks, drinks, suncream and insect repellent in locations such as the Costa del Sol, Spain; Marmaris, Turkey; Orlando, USA; and Phuket, Thailand.

Meanwhile, Portugal’s Algarve is the cheapest of nine eurozone destinations surveyed despite prices rising by a third year-on-year.

Data show a glass of wine would set you back less than £2 and a cup of filter coffee can be bought in the picturesque coastal region for just 81p.

Cape Town in South Africa has the lowest prices for UK visitors, driven by the rand's near-16 per cent fall against sterling in recent months and competitive pricing in bars and restaurants.

A three-course evening meal for two, including a bottle of house wine, typically costs just £35.80 in the coastal city.

The Red Sea resort of Sharm el-Sheikh is also in the best value top 10 on the back of a fall in the Egyptian pound’s value.

Ed Dutton, portfolio director for financial services at the Post Office, said: “Despite the volatility of sterling, it is still possible to bag a bargain with careful planning.

“Check exchange rate movements and the cost of holiday essentials before booking to see where you might get more holiday cash for your pounds but be aware that sterling gains can be cancelled out by big resort price rises, as the increase in Turkey proves.

“It will pay to be flexible when deciding on a holiday destination.

“The Egyptian pound and South African rand have been losing ground against sterling recently, while Latin American currencies like the Mexican peso and Costa Rican colon have been surging in value.”