Slovaks have record amounts deposited in banks. Inflation is slowly consuming them, the expert is cutting them out and offering a solution – PRAVDA.sk

For 10,000 euros, which we held in the current account at an interest rate of 0.1 percent pa in 2019, for example, in 2020 we were able to buy goods and services for EUR 9,820 at an inflation of 1.9 percent, the analyst explains.

At the end of June 2021, the volume of funds in Slovakia’s current accounts was recorded at EUR 24.9 billion. In the first six months of this year, Slovaks added up to 2.1 billion in bank accounts. eur. As Wood & Company analyst Eva Sadovská further stated, Slovaks thus had record-high amounts of money deposited in banks. The analyst estimates that during the lockdown period, Slovaks held about half a billion euros in current accounts, so to speak, in addition. With the easing of measures in the country, the increase in money in the current accounts of the population has been more modest.

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At the end of 2019, ie before the outbreak of the pandemic, the volume of money in the current accounts of the population accounted for 53 percent of the total euro deposits of the population. At the end of 2020, this share increased to 57 percent and at the end of June this year it was even recorded at 59 percent. According to Sadovská, such money is not valued, as interest rates on current accounts have been kept close to zero for several years, which is well below inflation levels for the fifth year in a row.

The growth of prices of goods and services in the years 2017 to 2020 ranged from 1.3 to 2.7 percent. This year, too, it will not be different, and current levels of inflation are breaking records, according to the analyst. According to the data of the Statistical Office of the Slovak Republic, inflation started the year 2021 at relatively low levels, less than 1 percent. During the following months, however, it gradually exceeded the limit of both one and two percent. Inflation reached 2.9 percent in June and even climbed to 3.3 percent in July, the highest level in eight years.

“For 10,000 euros, which we held in the current account at an interest rate of 0.1 percent pa in 2019, for example, in 2020 we were able to buy goods and services for 9,820 euros at an inflation rate of 1.9 percent. If the estimate for inflation higher than 2.5 percent is fulfilled for this year, we will be able to buy goods and services for less than 9,760 euros from 10,000 euros in the current account at an interest rate of 0.1 percent pa, “warns Sadovská. According to her, it is possible to win the battle with inflation by investing.