# Inflation bounces back in December as Christmas travel fuels price rises

By Sarah Coles — 2026-01-21

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Like the best kind of seasonal weight gain, the bump in inflation in December is likely to be a short-lived phenomenon, and it’s expected to drop again in January.

“It means these figures are unlikely to have much impact on the Bank of England’s rate cutting decisions.

“In more normal times, the seasonal inflationary blip, would be unlikely to steer the Bank from a rate-cutting path.

“Likewise, the easing of wage inflation revealed yesterday would typically add fuel to the fire for a cut – alongside sluggish GDP growth.

“However, these are far from normal times.

“There’s the risk of interruptions to global supply chains and increased trade tariffs, which could add more inflationary pressure in the coming months. It means the market isn’t expecting a cut until April.

“Alcohol and tobacco prices helped push inflation up, but much of that was purely down to timing.

“Tobacco duty increased at the end of November 2025 – pushing prices up in December, whereas in 2024 it all happened a month earlier.

“It means that in December, prices were rising faster than they were at the same time a year earlier – which automatically boosts inflation.

“Another big mover was transport. Petrol and diesel price rises had very little impact at all. Instead, it was air fares flying high.

“This owes a lot to timing differences, particularly the fact that this time in 2024 the flight prices being measured were Christmas Eve and New Year’s Eve – whereas in 2025 it was December 23 and 30.

“Prices are naturally lower on high days and holidays, and higher as people flock to get away in time for Christmas.

“Food prices tend to rise in the run-up to Christmas as the supermarkets cash in on the golden quarter for sales, so there’s nothing unusual in the rise in December, when food inflation rebounded to 4.5 per cent.

“Striking annual rises included beef and veal, whole milk and butter.

“Cattle farmers are still feeling the financial impacts of a poor grass harvest – as well as increased labour costs throughout the production and sales process.

“Poor harvests further afield mean higher prices for chocolate and sweets too. This will have meant shoppers pocketed less change after filling festive stockings with sweet treats.”

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