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A beautiful European country is home to a coastal holiday hotspot found to have the cheapest prices for UK sunseekers. Analysis of 22 popular destinations for Post Office Travel Money, the company’s foreign currency service, found Portugal’s Algarve, a 150-mile stretch of sundrenched coastline on the country’s southern coast with dozens of beaches, has the lowest prices for goods commonly bought by tourists.

While the Algarve has become a popular destination for British travellers with an array of picturesque resorts free of the crowds, its wealth of options mean you can avoid the overwhelming crowds seen in the more popular holiday destinations across Spain, Italy, and Greece. The price of everyday purchases is also said to be lower, only heightening its appeal. Standout destinations include Albufeira, a coastal city with a vibrant nightlife, and the tranquil waters of Praia Da Luz, a tranquil spot with famous volcanic rock formations, and which hailed by one TripAdvisor visitor as having the “best family beach in the whole Algarve”.

The region sees average temperatures of between 20 and 30C in July and August, according to travel firm TUI.

Sunny Beach on Bulgaria’s Black Sea coast took the second spot in Post Office Travel Money ranking, followed by the Spanish island of Lanzarote in third.

However, it’s worth noting that the Family Holiday Costs Barometer is based on prices for items like an evening meal, drinks, snacks and sun cream, but not the cost of travel or accommodation which can vary greatly through the year.

The most expensive resort analysed by these metrics was Sorrento, Italy, where prices were found to be nearly double those in the Algarve.

The typical cost of a three-course meal for a family of four, including wine and soft drinks, was found to be £150 in Sorrento and just £78 in the Algarve.

Laura Plunkett, head of Post Office Travel Money, said: “We found big variations in costs between the European resorts surveyed, which means it is more important than ever to do some research before heading off on your holiday to inform how much holiday cash you’ll need for meals, drinks and other tourist staples.

“For those families who haven’t already booked and are looking for a late deal, the low resort prices in Portugal and Spain make these countries great value for money, while Bulgaria’s Black Sea resorts are strong contenders too.”

Chris Logan, UK and Ireland commercial director of travel company Tui, which researched prices for the report, said: “We’ve seen particularly strong demand for popular western Mediterranean destinations, with holidaymakers continuing to choose trusted, well-established resorts that offer a familiar holiday experience.

“However, Cyprus and Turkey remain very popular, particularly with families, thanks to their strong mix of quality and value.”