Following the news of retail chain Makro slashing prices on the 360 there have been further price drops made by the retail sector.

The pricing war has begun with taking the price of the console down by a quarter, knocking out the machine for £149.99 instead of the RRP of £199.99.

For their part, Microsoft has not yet given an indication that an official price cut is coming, but retailers in Europe are happy to discount despite healthy sales. has also reduced the price of the Core Xbox 360, to £189.99, and is selling the pink PSP for £109.99, £40 below the RRP.

The move could force Sony to look at its pricing for the PlayStation 3 which if the current price reductions stand would mean that the new console is £225 more expensive.