Stockholm, August 28 - Swedish consumers' summer shopping spree showed no sign of abating in July and producer price inflation accelerated, data showed on Tuesday.
The two reports cemented market expectations that interest rates will rise next month and some analysts said the Riksbank may need to boost rates twice more this year after that.
Retail sales rose 9.4 percent from a year earlier, the statistics office said, compared with economists' forecasts for an 8.3 percent increase. Analysts said poor weather in July encouraged Swedes to go shopping.
"Once again we see tremendously strong retail sales in Sweden," said Alf Riple, economist at Nordea.
"When we compare July this year from last, we see much less pleasant weather and that usually turns people from the beach to the shops. Nevertheless the scale of the figures shows there is very healthy demand from Swedish consumers."
Durable goods sales jumped 15.4 percent from a year earlier, while sales of mostly food items increased an annual 1.7 percent.
Voracious consumer demand and evidence that factory gate price inflation is on the rise will put extra pressure on the Riksbank to stamp out any inflationary risks, economists said.
Producer prices rose 5.5 percent year-on-year in July, up from 5.4 percent in June. Economists noted that producer prices of consumer goods, showed a 2.7 percent annual increase compared with June's 1.6 percent gain.
"It is the highest level since 2002 and consumer goods is a good leading indicator for CPI," said Elisabeth Kopelman of SEB.
Swedish interest rates were increased in June by a quarter percentage point to 3.5 percent.
Before Tuesday's numbers, the market was already pricing in a rate rise in September and probably at least one more this year. Now, analysts are certain the Riksbank will pull the trigger next month and could even raise rates twice more.
"We already have a hawkish forecast for the Riksbank, with three (further) hikes this year, and these numbers strengthen that picture," said Knut Hallberg, analyst at Handelsbanken Capital Markets.
"Just about all statistics this past month indicate that the Riksbank is behind the curve."