"The increase in both costs and prices points to rising inflation pressures, which is underpinning expectations of interest rate increases from the Reserve Bank over the coming year," NZIER said.
The survey led some banks to bring interest rate forecasts forward to November, most having previously predicted the Reserve Bank would hold fire until next year.
Investing during rising inflation posed particular challenges for fund managers.
Sam Dickie, senior portfolio manager at Fisher Funds, expected companies with "pricing power" — the ability to raise prices by the amount their costs were rising, while not losing business to competitors — to be well sought.
While it was no longer listed on the NZX, Xero was an example of a company with good pricing power, he said.
"Vista [the cinema software company] is another one, and even the retirement villages have decent pricing power," Mr Dickie said.
At the other end of the scale were utilities, which were selling a commodity, and consumers could easily flick from one to another.
"If we do go into a sustained inflationary environment, we are going to see a sustained pickup in global interest rates — that is not going to be good for the defensive companies in New Zealand that have no growth, so that’s going to be the likes of your utilities, the property sector, and the so-called bond proxies."
The inflation debate picked up when pharmaceutical companies revealed the likely efficacy of their Covid-19 vaccines, which changed market expectations about when economies could recover.
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My grocery bill is up 25% from last year. DCC rates 10%, ORC 75%, electricity 8%, clothing 10% and the CPl is only 2%? Who is telling me the truth - the government statistics or my wallet? I wonder what the number would be if they including the price of a house?
I have always regarded economists, and meteorologists, volcanologists and seismologists for that matter as being on the same level as astrologists and other assorted necromancers.
They make a good show of pretending they are a science, they restrict membership to their groups to a select few, invent their own language and jargon, run all sorts of magic spells disguised these days as computer models and routinely make public pronouncements that usually turn out to be so much hot air. Occasionally they have a prediction that turns out to be right, or partially right, and they claim credit for their blind luck.
Personally I'd put as much faith in these $ each way, ambiguous predictions as I would in Ken Ring's predictions.