But analysts still expect the central bank to raise interest rates further this year to head off the threat of inflation.
Retail sales in May rose 5.7 percent after a 6.5 percent year-on-year increase in April. Activity in the sector remains strong however, and the central bank is concerned that higher than expected wage agreements, expansionary fiscal policy, and slowing productivity growth will put upward pressure on prices.
Consumer confidence also remains high, unemployment is falling, and figures from the statistics office this week shows inflation expectations have risen sharply among Swedish households.
Analysts expects Sweden’s central bank, the Riksbank, to raise interest rates twice more this year in September and October, from its current 3.5 percent.