Nearly all investors think inflation will rise faster than expected

Almost all professional investors expect a larger than expected hike in inflation in the next year, according to a new study.

Research from Tabula Investment Management reveals 95 per cent of investors think inflation will progress at a clip much higher than leading market commentators’ predictions.

Investors expect inflation to surge ahead of expectations as a result of wages in China reaching near parity with western levels, supported by other emerging market economies also experiencing average earnings hikes.

91 per cent of investors believe this “demographic reversal” – which cancels out lower prices for goods and services imported from countries with lower average costs of production – has intensified.

Michael John Lytle, ceo of Tabula Investment Management, said: “Professional investors believe there are longer term demographic and political trends that may lead to a sustained period of rising prices.”  

“Increasingly, professional investors not only need to focus on how to deliver growth and income within agreed risk parameters, but they will also have to focus on ways to address rising inflation.”

70 per cent of investors surveyed also expect globalisation to play a diminishing role in keeping prices in rich economies lower as more and more countries adopt isolationist economic policies.