On a 12-month bases inflation rose to 2.9 percent in March, up from 2.5 percent a month earlier, Statistics Sweden (SCB) said in a statement.

Consumer prices increased by 0.7 percent from February to March, the SCB statistics showed.

The agency said the increase was driven by price hikes for clothing and footwear and housing, while a 3.5-percent hike in fuel prices also helped push up inflation.

At the same time a 12.5-percent fall in the cost of international flights and lower costs for recreation and culture pulled the overall inflation back down a few notches.

According to the European Union’s Harmonised Index of Consumer Prices (HIPC), inflation in Sweden increased by 1.4 percent from March a year ago, compared to a 1.2-percent hike year-on-year in February, but still well below the 2.6 percent in the neighbouring eurozone.

The central bank has raised its key interest rate five times since last July to reach 1.5 percent in a bid to stabilise inflation close to its target of 2.0 percent.

In a forecast in February, the Swedish central bank said it expected inflation, which hit 1.3 percent in 2010, to rise to 2.5 percent this year before easing back to 2.1 percent in 2012.

At a time when many European countries find themselves in crisis, Sweden, which was hard-hit by the global financial downturn, has recently seen its economy boom.

In the fourth quarter last year, the Scandinavian country posted record growth of 7.3 percent, and last month the government raised its growth forecast for this year to 4.8 percent from a previous estimate of 3.7 percent.