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The group issued the warning followed an alert from Deutsche Bank that inflation concerns were increasingly taking hold of the international capital markets.

Klaus Martini, global chief investment officer for private clients at Deutsche Bank, said higher energy and food prices, rising wages in emerging markets and the weak US dollar, were the main drivers of global headline inflation rates.

Paul Wharton, investment director for Tilney said: "With inflation above 3 per cent in the UK and the eurozone, and more than 4 per cent in the US, we are beginning to see a structural economic change that is impacting equity markets.

"A secular rise in inflation would be bad news for present values and p/e ratios, but the decline will not be uniform."

He argued investors should be focusing on sectors benefiting from the shift in pricing power, to producers from consumers.

"That means moving from personal consumption, like retailers, towards those parts of the market that are driving the inflationary pressure, like farming, mining and energy," he said,

Hedge funds represented one of the best ways to take advantage of market shifts, added Mr Wharton.

"Long only equity funds are a difficult place to be with rising inflation. The advantage of hedge funds is that they are non-directional. They are able to take a view on this fluid situation, going long in mining stocks and short on consumer stocks for instance."

Despite Mr Martini's warning on higher inflation he also assured investors that the global economy still looked robust and industrial countries were unlikely to see the double-digit inflation rates they endured during the 1970s.

Overall, Deutsche Bank said it expected the world economy to grow by 3.5 per cent in 2008 and 2009, compared with almost 5 per cent in 2006 and 2007.