'We expect that all sales for Christmas this December will attain 61 billion kronor (S$10.9 billion)', Ms Margareta Ternell of the Swedish Retail Institute (HUI) said.

'It's an increase of 2.5 per cent compared to last year, including inflation.'

However she noted that the last decade had seen an annual increase in seasonal spending of between five and six percent.

'This year we just see an increase of two-and-a-half per cent because of the economic crisis,' she said. 'We don't think people will spend as much money as they did the last 10 years.'

Ms Ternell also said that shoppers were busier in Stockholm and the southern city of Malmoe, while at Gothenburg, the headquarters of the vulnerable automobile industry, people seemed to be tightening their belts.

Some retailers had also launched their traditional post-Christmas sales early this year for fear of being left with unsold stock.

Sweden slipped into recession in the third quarter as household consumption shrank for the first time since 2001 and its industry production dwindled.

In Sweden's neighbour Finland, the HUI's equivalent also predicted that shoppers would be spending more, but attributed it to rises in the cost of food. -- AFP