Sainsbury’s de luxe ready meals are selling well again. Photograph: Alicia Canter

This year was meant to mark the start of a tough new era of austerity: frivolity would now be frowned on and frugal would be the new cool. The near-collapse of the banks and the plunge into recession was about to make us reassess our values and habits, and a new breed of consumer would emerge who shunned conspicuous consumption, hated waste and preferred baking their own bread to banging a ready meal into the microwave.

But according to Tesco and Sainsbury’s, that new era is over. It lasted about as long as the clampdown on bankers’ bonuses. Shoppers have stopped trading down to cheaper food at discount stores and are once again spending on life’s little luxuries – like a night in with a meal of pancetta-wrapped chicken and slow-roasted mediterranean vegetables prepared in a factory far away.

Tesco says that sales of its Finest premium-priced range are increasing again after a year of decline, especially sales of ready meals. Organic products, which had fallen off a cliff, are also coming back. The grocer’s top-of-the range lasagne is up 20% on last year, even though it is twice the price of the standard product. Organic blueberries are up 86%, while ground coffee has climbed 34%.

It is the same at Sainsbury’s, whose 18 million shoppers a week are definitely feeling “bouncier”, the supermarket’s chief executive, Justin King, said last week. “We’re seeing ready-meal sales increase quite significantly, particularly at the top end. Consumers are in a much better place than a year ago. Interest rates have gone down; fuel costs are still down on last year. They have more money left at the end of the week and are using it for treats.” And that means heat’n'eat steak au poivre and chunky chips rather than a takeaway.

Twelve months ago the picture was very different. The financial crisis had sapped consumer confidence; food prices were rising fast and shoppers were seeking bargains. The so-called “hard discounter” supermarkets from Europe – such as Aldi and Lidl – were booming. Aldi’s sales were up 25% as low-income and middle-class shoppers alike tried to cut costs. For the big supermarkets, who had been putting quality, provenance and green issues at the top of their agenda, price was suddenly the priority again.

Sainsbury’s switched its frontman Jamie Oliver from extolling the virtues of nutmeg to showing how to feed a family for a fiver, while Tesco launched a new cheap range to halt the exodus of shoppers to the discounters and rebranded itself as “Britain’s biggest discounter”.

It was Andy Bond, the boss of Asda, who heralded the new era of frugality: “This won’t be a recession where it is a blip and then we are back to where things were.” He likened the change in thinking to the way postwar austerity shaped a generation, and forecast an end to the boom in ready meals. It looked like he was right: sales of comfort food such as tinned peaches and custard soared, along with sandwich boxes and Thermos flasks, as the credit crunch put an end to the pub lunch. But now Asda’s top-priced range of chilled dinners is also up 40% on a year ago.

Mark Price, the managing director of Waitrose, says grocers started to see the change back in April. “If you are still in work, and your job is secure, then you are now better off than you have been for a long time. You are in a good place to start buying more premium-priced food again. We have definitely seen a pick-up… Consumers did the Aldi and Lidl thing, and eventually thought, ‘How much longer do I have to do this for?’”

Like Sainsbury’s and Tesco, Waitrose is selling more time-saving TV dinners. Sales of organic goods, which two years ago were chalking up growth of 30% a year, were down 20% earlier this year. But now the decline is “only marginal”. Organic fish sales, says Price, are up 50% on a year ago, and organic milk has also “gone back into growth”.

Bottles of bubbly, almost a standard quaff in the boom years, are making a comeback. “Last year was all about cava,” said Price. “But this year cava sales are down and champagne sales are up.”

Shoppers are starting to worry about provenance again. According to Mike Coupe, Sainsbury’s trading director, Fairtrade goods are selling better and Freedom Food, from animals reared in line with RSPCA guidelines, is up 130%.

Flower sales are also blooming. In January, orders for flowers to be delivered by Waitrose Direct were down a fifth on 2008 levels. They are now down just 3% and “are expected to be back in growth by the end of this year”.

At Bradford-based Morrisons, famous mainly for its cheap prices and pie counter, chief executive Marc Bolland said the trend back to more upmarket shopping was not a worry. He said: “We are seeing a big uplift [in premium products] too.”

What’s the next sign of returning consumer confidence? Rising sales of women’s magazines, says Coupe confidently, and declining sales of hair dye as women switch back to getting their highlights at a hair salon, rather than out of a bottle.

The rise and fall of cheap shopping

The credit crunch has been accompanied by the British shopper’sa brief love affair between the British shoppers and the withdiscounters Lidl, Aldi and Netto. A year ago, as shoppers defected to cheaper stores,Aldi was enjoyingenjoyed annual sales growth of more than 20%, according to data from the retail analysts TNS Worldpanel. The lButthe latest industry figures show thatthis rampant growth has tailed off slipped to 8% in September, thoughit the discounter has managed to hold a 3% share of the £130bn grocery market worth around £130bn.

Fraser McKevitt, a retail consultant at of TNS Worldpanel says that last year showeda clear pattern,of the with top-end grocers such as M&S and Waitrose suffering while the cheaper shops prospered: “Since we have come into this year, that simple message and story where shoppers were trading down has become a bit more cloudy.” he adds

While discount chains were never going to be able to sustain such bigrapid growth rates, Furthermore, a trend has emerged of shopperstaking adopting a “cherry-picking” approach to “cherry-picking” at the likes of Lidl and Aldi – only buying certain cheaper items in cheaper grocers rather that than a full weekly shop.

A lot of people have tried the discounters, but repeat rates of people shopping there again and again have been tailing off, says McKevitt.

Waitrose’s fortunes have improved as shoppers flock back to buywith its new Essentials range, McKevitt adds. The grocer, which has also been hHelped by its acquiring new stores from Somerfield,and it the grocer enjoyed 11.2% annual sales growth in the 12 weeks to 6 September, compared with 3.4% a year earlier. and a slight annual decline in takings around Christmas 2008. Sainsbury’s, meanwhile, has broadened its Basics range, helping to boost its sales growth rate to 7% from 6.2%a year ago. Katie Allen