The official figures are in, and UK inflation climbed up to 3.4% in December 2025, coming in above expectations and well above the Bank of England’s target of 2%. (source: Office for National Statistics, ). Rising costs in food and travel combined with higher duties on things like tobacco continue to push prices higher. For many households the reality is clear: inflation is not going away and the cost of living crisis is getting worse.
What’s Behind the Latest Rise?
The festive season always brings a predictable uplift in travel costs, but this year the jump was dramatic. Air fares soared by 28.6% in December alone.
Tobacco prices rose by 1% after Chancellor Rachel Reeves’ Autumn Budget duty changes came into effect. Meanwhile, food prices, particularly for staples like bread and cereals, pushed overall food inflation to 4.5% (up from 4.2% in November).
Core inflation (excluding food and energy) held steady at 3.2%, still well above the Bank of England’s 2% target. Services inflation also edged up to 4.5%, indicating broader pricing pressures in the economy.
While CPI Rises, Gold Quietly Gains 15% in 3 Months
Interestingly, while inflation inched upward, gold quietly surged. Over the last three months alone, the price of gold has climbed 15%, and in the past year it has increased by a remarkable 63%.
This isn’t about market speculation or dramatic headlines, it’s about context.
As the cost of essentials creeps up and interest rates remain low in real terms, savers are starting to question how their money performs against inflation. A bank account earning 2% interest, for example, still loses value if inflation sits at 3.4%. And that’s before tax.
Meanwhile, gold, has not only held its value, but outpaced inflation significantly. While no asset is immune to short-term fluctuations, gold’s long-term role as a store of purchasing power is difficult to ignore.
What Inflation Really Means for Your Savings
Even “moderate” inflation eats away at savings over time. Take a typical £10,000 held in a savings account. With inflation averaging 3%, its real-world value shrinks by around £300 a year. After five years, that’s over £1,500 of lost purchasing power.
And while fixed interest accounts offer predictability, very few beat inflation once you factor in income tax and account fees. The Bank of England’s cautious stance on cutting rates means this real-terms loss could persist for much of 2026.
Is This a Turning Point?
The government has insisted that “2026 will be the year Britain turns a corner” , but whether that optimism is reflected in the real economy remains to be seen.
The UK economy expanded just 0.3% in November, narrowly avoiding contraction. Normally, this type of environment would trigger rate cuts from the Bank of England to stimulate the economy but because inflation remains heightened, many analysts are not expecting rate cuts any earlier than June 2026.
With uncertainty lingering and household bills still climbing, more and more Brits are now asking: Is my money actually safe sitting in cash?
Quiet Hedging, Not Panic Moves
This isn’t a call for panic or drastic reallocation. But for financially aware savers, especially those frustrated with persistent inflation and rising costs, it’s reasonable to rethink where to store your savings.
That’s where gold enters the conversation, not as a windfall asset, but as a long-term buffer against currency erosion. It’s not about speculation. It’s about not standing still while inflation silently chips away at your purchasing power.
Until recently, owning physical gold had some downsides. Storing and insuring it yourself is a hassle, and you can’t buy anything with it like you can with cash. TallyMoney changes that.
With TallyMoney, your pounds are converted to real, LBMA-certified gold instantly stored securely and insured on your behalf. You also get all the conveniences of modern banking, from payments to transfers and instant access. You get a Tally debit Mastercard® allowing you to spend your funds whenever you want, globally.
In short, you get the best of both worlds – the inflation resilience of gold with the spenability of cash.
Final Thought: Is Your Money Still Holding Its Value?
Inflation may come down in 2026. Or it may linger longer than hoped. Either way, the question isn’t just “what’s the rate now?” but “what’s my money actually worth next year?”
Gold’s recent performance is a timely reminder: some forms of money hold up better than others.
