You can find bargains in children's gifts - if you look

There's good news and bad news for soft-touch Santas this season. The good news: Inflation on the toy shelves remains lower than with other consumer goods.

The bad news: This year's ''hot'' item - the home video game - could cost you as much as your total Christmas budget in years past.

Primed by the dueling Atari and Intellivision commercials, today's computer-savvy kids are not content with the old stick and ball, contends one industry official. And while retailers report the games are selling fast, it's likely that at $130 or more per unit and $20 or more per game cassette, the video ticket to the stars won't be under every Christmas tree this year.

But this doesn't mean it will be a lean year for kids, says Douglas Thomson, president of the Toy Manufacturers of America. He says family budgets and the expectations of even the most sophisticated child can be met if would-be Santas take advantage of certain market conditions, including:

* Large markdowns on the glut of hand-held electronic games from last year.

* Special prices on ''loss leaders,'' where a retailer takes a loss on a popular item to draw customers into the store.

* Reasonably priced staple items.

Although the Christmas shopping season reportedly has had a sluggish start in other areas, the toy industry reports a leveling, but not a drop, in business.

''Where we've had 10 or 12 percent increases (in volume) in previous years, we expect that the total dollar volume for this year won't rise much,'' says Mr. Thomson, adding that consumers are expected to spend $6.5 billion on toys by year-end.

The best deals this season may be the hand-held electronic games that include sports, reading, spelling, and math games, industry officials say. The popularity of these small battery-operated devices inspired dozens of cheaper versions called ''knock-offs'' - swamping the market, explains George Ditomassi, vice-president of Milton Bradley. Its Simon electronic sound game was copied by a dozen ''knock-offs'' when it was introduced in 1978, he says.

The glut, which includes both reliable and unreliable products priced originally at more than $20, says Mr. Ditomassi, has forced retailers to unload these items at prices as much as 50 percent off.

The key in buying these items, he explains, is quality and repeat play value - if it's too simple or too hard, it won't hold a child's interest.

Also, industry officials warn, do not buy any item from a store that won't stand behind its products. Many hand-held electronic games, they say, are less reliable foreign products developed rapidly and sold without guarantees.

In considering a toy, consumers should compare it with the price of comparable entertainment. For example, says Thomson, a $300 video game that provides hours of entertainment might be worth it ''compared with what it costs to take the family to eat out and go to a movie.''

It pays to shop through ads, especially at this competitive time of the year when the toy industry typically does 60 percent of its annual business, suggests Thomson.

While a consumer overwhelmed by a $50 teddy bear, or $100 rocking horse might wonder where the bargains are being hidden, there are still good cheap toys to be found, assures Thomson. He cites such staple items as Barbie dolls and Monopoly games - traditionally popular products. He notes a set of plastic building blocks spotted in a retail store for less than $10; Play-Doh for $2; a set of dominoes for less than $5.

No matter what the cost of a toy, advises toy safety advocate Edward Swartz, parents should be aware of their possible dangers. The Boston attorney's annual list of 10 worst toys, announced this week, includes items like projectile toys, objects small enough for toddlers to swallow, poisonous model train smoke, plug-in electrical toys, and sharply pointed toys.

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