The Czech Republic is much less expensive than Britain but it depends however on what you're considering! Prague, like all European capitals, has seen its prices inflate proportionally with the influx of Western tourists. Now in the city centre, hotels and restaurants are approximately the same price as in Britain.
However it's enough to move a few streets or districts away, or to travel anywhere else in the Czech Republic in order to find much more affordable accommodation and restaurants.
The Czech Republic is often presented as a country with much lower prices than Britain. It's true, but still it's necessary to know what is being talked about.
It's actually difficult to find cheap, good quality accommodation. Limited during the communist era, these accommodations have often maintained the abusive rates for quality which is on the border of acceptable. What isn't difficult to find in any Czech city is the former official hotel, a block of gloomy concrete. However more and more home-stay accommodations are coming to offer half-board rooms defying all competition in terms of price and reception (around £16/night). New, more luxurious institutions have obviously been created with prices similar to those found in Britain.
In terms of restaurants, prices have remained much lower than in Britain. Of course the quality of the Czech food is not to the taste of everyone, but the prices are very reasonable beyond the central areas of Prague and some extremely touristy places.
It's even nicer that the culinary scene is becoming more and more diverse in the big cities with the arrival of new bistros with Italian, French or Asian influences and with prices that remain completely reasonable.
Drinks are also much cheaper than in Britain, particularly beer which is sold for next to nothing and seems to accompany any outing. The Czech people have so much fun that in the majority of restaurants and cafes, a pint of local beer costs less than a little bottle of water!
Finally be aware that transport and tourist activities are also generally a good price. A train journey will cost you on average £4-5 per 100 km, although it's far from high speed! Therefore it's not difficult to travel in the Czech Republic.
For accommodation, you can sleep in a dormitory from around £8, or find a double room in a pleasant hotel for around £27.
For food, prices start from less than £5 in a traditional Czech restaurant. For £8 per meal you'll eat very well, but don't expect to spend less than £18 for a culinary experience. A beer or a coffee will cost you less than £1.
Transport within the city is very cheap: a bus or metro ticket costs around 50 pence, whilst a taxi journey in the city will cost you a few pounds. However be careful with the taxis, it's best to use trusted companies rather than flagging down a car in the street, cases of tourists being ripped off have regularly been reported.
As for diverse activities such as the cinema, renting a kayak, ski passes, etc., except to pay around half of the British price.