It’s latest Item Club report said inflation had averaged 3.5% – well above the government’s target of 2%.

It added high inflation would “remain a permanent fixture” in the UK and it is not likely to fall below 2.5% before 2017, the BBC reports.

Inflation at this rate has had a “corrosive impact on the UK economy”, according to E&Y. Food prices have risen 40% since 2007 and consumers are also struggling with rising fuel and education costs, the report said.

However, Item Club senior economic adviser Carol Astorri said it could have been worse.

“Our modelling shows the [Bank of England’s Monetary Policy Committee] were right to stick to their guns, allowing inflation to overshoot and avoid tightening monetary policy.

“The alternative scenario would have seen interest rates rise by 3.5% in 2011, choking off the recovery even earlier and adding an additional 625,000 people to UK dole queues,” the BBC reports.