The report takes the average price of eight essential purchases, including an evening meal for two, a beer, a coffee and a bottle of suncream, in 44 of the world’s most popular spots. The Algarve region overtook Sunny Beach in Bulgaria, while Turkey’s Marmaris came in third place.

The Algarve was almost £3 cheaper than its closest European counterpart in eight different categories, which includes a cup of filtered coffee, Bottle of beer/lager, Bottle/can of Cola, Glass of wine, 1.5l bottle of mineral water, suncream, insect repellent and a 3-course evening meal for two.

Wine in the Algarve is the cheapest in the 40 resort areas studied in the world at £1.76 - according to the Holiday Money Report from Post Office Travel Money.

Cyprus’ Paphos came in fourth, while Spain’s Costa del Sol came in fifth – a remarkable £21.76 more expensive than the Algarve in the eight chosen essential purchases.

Sterling looks set to play a pivotal part in holiday choice in the coming months, according to the 18th annual Holiday Money Report from Post Office Travel Money. The report reveals that 90 percent of the Post Office’s thirty bestselling currencies are currently weaker against sterling than a year ago, resulting in price falls in many of the world’s most popular destinations – especially long-haul resorts and cities.

Local prices are up year-on-year in four out of five destinations. But, once these prices are converted to sterling, you can expect to pay less than a year ago in 19 long-haul destinations and six European ones. The price falls apply to seven of the 10 destinations offering British tourists the lowest prices.

Head of Post Office Travel Money, Laura Plunkett, said: “By comparison, sterling’s gain against the euro has been more modest so it will pay to compare eurozone destinations to see which offer the cheapest prices. Portugal and Cyprus look the best choices for bargain hunters.

“The Algarve has always been great value, particularly for meals and drinks, but this year our barometer research found that local prices have remained steady and the strength of sterling means that visitors can expect to pay even less than last year.”

Research for the Post Office Worldwide Holiday Costs Barometer, which is published within the report, has found that prices for meals, drinks and other tourist items have fallen since last year in 25 of the 40 resorts and cities surveyed. But it is the strength of sterling rather than prices charged in restaurants, bars and shops abroad that will make many destinations cheaper for British visitors.

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Hello reader, I'm Ben. I love to write and talk about sports and I am, unfortunately, hopeless at golf. Thanks for reading! 

Ben Lynch