The Riksbank said it is raising its repo rate by 0.25 percentage points to 2.25 pct, based on evidence of upward pressure on inflation and an acceleration of economic activity. "Inflation has risen over the past year," the Swedish central bank said in a statement following yesterday's meeting of its executive board. "In May both CPI and UND1X inflation were 1.6 per cent. The higher rate of price increases is largely due to rising energy prices, although the prices of some other goods have also been raised at a faster rate than previously." Looking forward, economic activity is expected to remain good, and UND1X inflation in line with targets a couple of years ahead. However, these forecasts "are based on the assumption that the repo rate will be gradually increased." It is therefore reasonable to assume "that the repo rate will need to be increased further. It is possible that there will be a need for slightly more rate increases over the coming year than recent market expectations have implied." The UNDIX - Sweden's the underlying inflation index - excludes household interest expenditure.