High inflation 'is here to stay', says Item Club Item's senior economic adviser, Carl Astorri, said the alternative scenario would have seen interest rates rise by 3.5pc in 2011, choking off the recovery even earlier and adding an additional 625,000 to the dole queue. Food prices have risen by nearly 40pc since 2007, while businesses and consumers have also had to endure the impact of rising oil and commodity prices, a weakening pound and rises in VAT. The report warned that even once temporary factors, such as a rise in tuition fees, had fed through the system, underlying inflationary pressures will have started to build again. As the economic recovery continues to strengthen, workers will have greater bargaining power to push for wage increases while businesses will be in a better position to grow their profit margins with price hikes. Rising import prices from emerging markets are also set to continue, driven by increasing labour costs as their economies mature. The squeeze on household budgets was highlighted last week in official figures showing wage growth of just 0.4pc in the year to March, well below the level of consumer price inflation at 2.8pc. Mr Astorri said: "High inflation has had a corrosive impact on the UK economy over the last three years, eating into household spending power which has taken its toll on the high street."