Inflation: how it eats savings and how to protect them

What inflation is in plain words

Inflation shows how much the goods and services an ordinary household buys have gone up in price over a period: groceries, utilities, transport, clothing, medicine. Every month Ukraine's State Statistics Service collects prices for hundreds of items and calculates the consumer price index. When people say “inflation is 8% a year”, it means that basket of purchases now costs 8% more than a year ago.

For your wallet, the other side of that number matters. If prices rose by 8%, every hryvnia became cheaper. UAH 1,000 now buys what cost about UAH 926 a year ago.

How much inflation eats: a worked example

Take UAH 100,000 kept at home or on a card with no interest. The balance does not change, but it buys less and less.

Purchasing power of UAH 100,000 in today's prices if prices rise by 8% every year (roughly as in 2025). WM² calculation.

Purchasing power of UAH 100,000 at different inflation rates
Inflation a year	After 1 year	After 5 years	After 10 years
5%	UAH 95,238	UAH 78,353	UAH 61,391
8%	UAH 92,593	UAH 68,058	UAH 46,319
10%	UAH 90,909	UAH 62,092	UAH 38,554

At 8% inflation, money with no interest loses more than half its value in 10 years. For shopping this looks like this: an item that costs UAH 1,000 today will cost about UAH 1,469 in 5 years and about UAH 2,159 in 10 years. Check it for your own amount, rate and term in the inflation calculator.

Nominal and real return

The bank writes the nominal rate in the contract: the interest you get before tax. For savings, what matters is the real return: how much more you will be able to buy a year from now. To calculate it, subtract taxes and inflation.

Now take a deposit at 10% with the same 8% inflation. After tax you keep 7.7%, and the real return turns negative: minus 0.28% a year. On paper the balance grows, but it buys slightly less than at the start. So always compare the rate with inflation, and only after tax. The deposit calculator shows the income after the 23% tax.

What happens to UAH 100,000 over a year at 8% inflation
Where the money is	Income after tax	Real return
At home or on a card with no interest	0%	−7.41%
Deposit at 10%	7.70%	−0.28%
Deposit at 15%	11.55%	+3.29%

The 10% and 15% rates in the table are illustrative. Check current rates in your bank's contract.

Why prices rise

There are usually several reasons, and they overlap:

Producer costs. Energy, fuel, raw materials and logistics get more expensive, and those costs pass into the price of goods.
The hryvnia exchange rate. A large share of goods is imported or made from imported components. When the hryvnia weakens, they get more expensive.
Demand. If people and the state have more money but the supply of goods does not grow, prices go up.
Expectations. When everyone expects prices to rise, businesses build it into prices in advance and people rush to buy. Expectations end up driving inflation on their own.
Poor harvests, war, supply disruptions. Specific goods can jump in price because supply is limited.

Keeping inflation in check is the main job of the National Bank of Ukraine. To do it, the NBU changes its key policy rate: when inflation speeds up, it raises the rate, loans get more expensive, deposit rates go up and demand cools. The NBU publishes its forecasts and the reasons for its decisions in its inflation reports.

Where to find the current inflation rate

The State Statistics Service publishes official inflation every month: the consumer price index for the month and for the last 12 months. On the same day the National Bank comments on what exactly got more expensive and why. Once a quarter the NBU releases an inflation report with a forecast for the coming years.

For personal calculations, use annual inflation, that is, the change in prices over the last 12 months. The monthly figure works poorly: vegetables get cheaper in autumn, utilities get more expensive in winter, and a single month gives a distorted picture.

Keep in mind that your personal inflation may differ from the official figure. If most of your budget goes on rent, medicine or imported electronics, and those items rise faster than average, your money loses value faster than the statistics show.

How to protect your savings from inflation

Don't keep large sums without interest. Money for current spending can stay on your card. Move the rest somewhere it earns income.
Compare the rate with inflation after tax. If the income you take home is below inflation, your money still loses value, just more slowly.
Consider government bonds. For individuals, income from Ukrainian government bonds (OVDP) is not included in taxable income, so at the same rate they pay more than a deposit. How to compare them is covered in “Deposit or government bonds: which pays more after tax”.
Keep your emergency fund separate. Its job is to be available, not to earn the maximum. It still shouldn't sit without interest. Details in our article on the emergency fund.
For the long term, think about investing. Over 10 years or more, compound interest and regular contributions help you outpace inflation. How it works is explained in our article on compound interest.
Don't stockpile on emotion. Stocks of goods that will spoil or go out of fashion do not protect against inflation; they just freeze your money.

In short

Inflation is a rise in prices. In December 2025 it was 8% year on year.
At 8% inflation, UAH 100,000 with no interest will buy in 10 years what UAH 46,319 buys today.
What matters is the real return: the rate minus taxes (23% of deposit interest) and minus inflation.
At 8% inflation, a deposit at 10% does not protect your money after tax; at 15% it gives about 3.3% real return.
Protection from inflation: money at interest, comparing rates after tax, government bonds and, for the long term, investing.

Sources

This article is for information only and is not financial or investment advice. Check current terms with your bank or financial institution before making decisions.