Microsoft Europe's Chris Lewis has told MCV "We are making modest increases on the Xbox 360 Arcade console as you can see. The reality now is partly to offset currency exchange rate fluctuations which have impacted us in local market conditions – particularly in the UK."
"And you've seen other consumer products operate in the same way. But I think even with that we still offer the most affordable console in the marketplace out there."
"So we've reset the price point largely based on exchange rate fluctuations, but are still very happy we offer great value through the Xbox 360 Arcade."
Currency fluctuations, eh? Take a look at this chart below, showing the value of the Pound against gaming's three major currencies: the Yen, Euro and US Dollar. Your eyes, they do not deceive you. The pound has increased in value over the past six months, meaning overseas purchases are cheaper, meaning the exchange rate excuse doesn't hold water. And it's the same for the Pound against the Yuan, as well as for the Euro against all mentioned currencies.
So if the price hike was "partly" due to "currency exchange rate fluctuations", we'd love to know what the rest of the reason was.