Inflation forecasts are now rising following massive increases in government spending and the torrent of liquidity unleashed by central banks in response to the coronavirus pandemic.

Ugo Montrucchio, head of multi-asset investments for Europe at Schroders, said clients of the £526bn UK asset manager were asking “more and more questions about inflation”.

“Inflation is at the forefront of the minds of our large institutional clients but less so for retail investors,” said Montrucchio. He has been increasing allocations to commodities, US financial stocks and short-term government bonds as hedges against rising inflation.