STOCKHOLM: Swedish retail sales grew at a faster pace than expected in August, easing pressure on the Nordic country's the central bank to cut rates which are already at a record low due to stubbornly low inflation.
Retail sales rose 1.9 percent in August from July and increased 4.6 percent from a year earlier, outpacing expectations for a monthly increase of 0.6 percent and an annual rise of 3.4 percent.
The monthly rise was the biggest since May last year and showed a healthy rebound from weak figures in July. The data also showed a relatively robust domestic market that has the potential to offset an export sector still dragged down by a struggling euro zone, Sweden's main trading partner.
In the same month, Sweden posted a rare trade deficit as imports came in strong while exports remained a subdued, data showed last week.
"Swedish households are well off and we have continuing strong demand in the Swedish economy. It is hard to see what would turn that around," Nordea economist Torbjorn Isaksson said. "On the margin, this indicates the Riksbank will not cut the repo rate again."
The central bank surprised markets this summer by cutting its key repo rate to a record low of 0.25 percent, a level not seen since the aftermath of the 2008 Lehman Brothers crash.
Market pricing suggests some probability for another rate cut this year. The central bank's next rate decision is published on Oct. 28.
The Swedish crown strengthened marginally versus the euro to 9.20 crowns from 9.21 crowns just before the data was published.
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