Newspaper article The Evening Standard (London, England)

How Long until Aldi Nation Sees Upside in This Recovery? ECONOMIC ANALYSIS

Newspaper article The Evening Standard (London, England)

How Long until Aldi Nation Sees Upside in This Recovery? ECONOMIC ANALYSIS

Article excerpt

Byline: Russell Lynch

HERE are a few snapshots from recovery Britain. Growth next year will improve dramatically, says the OECD thinktank; inflation is at its lowest level for more than a year, at 2.2%; and, erm, almost a third of households have been shopping at discount supermarket Aldi in the last 12 weeks, according to industry figures.

The rapid emergence of Aldi Nation is underlined by research firm Kantar's data. The number of shoppers visiting the stores has grown by 16% year-on-year and they're also putting nearly 15% more in their basket by value. For the Coalition, the rising cost of essentials -- with wages back at 2003 levels in real terms -- poses the risk that credit for this recovery will be sparing when Britain goes to the ballot box in 18 months while Labour makes hay.

As Bank of England Governor Mark Carney put it, you don't have to be an optimist to see the glass as half full. The IMF also upgraded growth forecasts a month ago. But consumers bracing themselves for 10% rises in gas and electricity bills flopping on to the doormat early in the new year might be forgiven for disagreeing. The graph shows how the cost of essentials such as food, drink and household bills have pushed well ahead of overall prices as measured by the Consumer Prices Index.

Some alarming figures from the Office for National Statistics, meanwhile, show the share of disposable income spent on such household essentials rising from 20% to more than 27% over the past decade. The bulk of this increase -- as we in London are painfully aware -- has been in the cost of housing, which now accounts for more than 20% of income compared with less than 15% back in 2003. Meanwhile, regular pay is growing at the lowest level since the ONS's records began.

How long will this state of affairs continue? Falling real-terms wages kept a lid on unemployment during the recession, at a cost of lower productivity. This was a good thing for those able to keep paying the mortgage. But there are few signs of a return to real terms growth in salaries in the immediate future. …

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