Eurozone (EA16) annual inflation is expected to be -0.1% in October 2009 according to a flash estimate issued by Eurostat, the EU statistics office. It was -0.3% in September. The Eurozone savings rate was 16.5% in Q2 2009 compared with US rate of 4.9%.

Eurozone inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available4 as well as early information about energy prices.

The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the Eurozone. No detailed breakdown is available. Eurostat says experience has shown the procedure to be reliable (18 times exactly anticipating the inflation rate and 6 times differing by 0.1 over the last two years).

Eurostat also reports that in the second quarter of 2009, in both the Eurozone (EA16) and the EU27, the seasonally adjusted household saving rate continued to increase.

The data come from a detailed set of quarterly European sector accounts released by Eurostat and the European Central Bank (ECB).

Household saving rate up in both zones

In the second quarter of 2009, the seasonally adjusted gross saving rate of households was 14.4% in the EU27 compared with 13.5% in the first quarter of 2009. In the Eurozone, the household saving rate was 16.5% in the second quarter of 2009, compared with 16.0% in the previous quarter. In both zones, these were the highest rates recorded since the start of the series in the first quarter of 1999.

In the Eurozone, the increase in the household saving rate was due to disposable income growing faster (0.7%) than final consumption expenditure (0.2%).

On Thursday, it was reported that the US savings was 3.3% in the third quarter. In the second quarter, it was 4.9%.

The gross saving rate of households is defined as gross saving divided by gross disposable income, with the latter being adjusted for the change in the net equity of households in pension funds reserves. Gross saving is the part of the gross disposable income which is not spent as final consumption expenditure. Therefore, saving rates increase when gross disposable income grows at a higher rate than final consumption expenditure.

The European Union (EU27) consists of 27 Member States: Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom plus the European Central Bank and the EU institutions.

The Eurozone (EA16) consists of 16 Member States: Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland plus the European Central Bank.