Except of course that there are enough people willing to pay £1.25 so they easily cover the odd £1.10 lost by the hundreds of extra 15p they take.
Not a very good example, I think.
Also not discussed is one reason certain things in the UK are more expensive than in the States is VOLUME. The market in the States is soooo much bigger than in the UK that certain costs can be spread out whereas in the UK these costs have to be recouped from a much smaller source. Not the whole story but does contribute to some of the higher charges.