Ukrainians Advised to Protect Savings from Inflation

Inflation reduces the purchasing power of money, making it impractical to keep savings in cash or in a checking account. Hryvnia deposits and government bonds (OVGZ) offer yields that exceed the expected inflation rate. Hryvnia term deposits in Ukrainian banks yield 15-17% per annum, and after tax, this drops to 12-13%. OVGZ provide returns ranging from 13% to nearly 17% per annum, with income not subject to taxation. Inflation is expected to be around 10% next year, while banks forecast 8-9%. The National Bank of Ukraine anticipates inflation below 7%. Thus, the yields on hryvnia instruments surpass inflation forecasts, which can ensure real growth of savings. In August, economic activity in Ukraine declined due to Russian attacks and port blockades, worsening business expectations and accelerating inflation.

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