Commenting on today’s higher than expected inflation rate rise, savings specialist at Scottish Friendly, Kevin Brown said

“December’s inflation reading shows that the road back to the Bank of England’s 2% target isn’t necessarily a straightforward one.

“An increase demonstrates that price pressures can still re-emerge, particularly around seasonal periods like Christmas when demand spikes and discounts unwind.

“Some of this rise was likely driven by temporary factors, including higher festive spending, air fare increases and volatility in food and services prices. But since inflation prevails above target, this reading will have raised questions within the Monetary Policy Committee about how quickly it can ease policy without risking a renewed pickup in prices. As a result, expectations of an imminent rate cut may have now tempered.

“For borrowers, ambiguity continues. Mortgage rates are still expected to trend down over the year, but today’s data might mean that comes more slowly than hoped.

“For savers, rising inflation highlights evermore the problem that inflation can quickly chipping away the real value of cash savings. A short-term rise in prices reduces purchasing power immediately, and cash returns often struggle to keep up over sustained periods.

“That’s why it remains wise to look beyond cash for long-term goals. Investing has historically offered a far better chance of protecting purchasing power and growing wealth over time. In an environment where inflation continues to erode cash, that distinction is key.”