* Underlying inflation 2.3 pct yr/yr, above Riksbank forecast
* Second month in a row above 2 pct inflation target
* Rate hikes dependent on crown, ECB
(Adds analyst comment currency reaction, background) STOCKHOLM, Sept 12 (Reuters) - Underlying inflation in Sweden hit the central bank's 2 percent target for the second straight month in August, supporting arguments that the time is right to start tightening monetary policy amid signs of an overheating economy. Swedish consumer prices fell 0.2 percent in August from the previous month but were up 2.1 percent from the same month last year, the statistics office (SCB) said on Tuesday. Underlying inflation (CPIF), which strips out interest rate effects, fell 0.1 percent on the month but was up 2.3 percent on the year. CPIF - the measure of underlying inflation recently adopted as the official target - was just above the central bank's own expectations and in line with those of analysts in a Reuters poll. "We think inflation is going to dip a bit during the year, but these figures nevertheless support our view that the Riksbank may start hiking sooner than they have forecast," said Olle Holmgren, analyst at Swedish bank SEB. The timing of a rate rise by the central bank, the Riksbank, will be partly influenced by when and how far the European Central Bank decides to tighten. Holding policy unchanged earlier this month, the Riksbank, said it would start raising rates in the middle of next year. The crown currency strengthened on the figures. Pressure has been rising on the Riksbank to begin normalizing ultra-loose policy. The economy is running pretty much at full speed while underlying inflation, including August's reading, has been 1.9 percent or higher for six out of eight months this year. January and March were 1.6 and 1.5 percent respectively, but inflation is volatile and the central bank itself has said individual months' results should be taken with a pinch of salt. Still the central bank is not happy. Speaking after the latest rate decision, Governor Stefan Ingves said it was "too risky" to change monetary policy tack now, despite inflation being basically back on track. The reason, according to Ingves, is that moving ahead of the European Central Bank (ECB) would cause the crown to appreciate and push down inflation again. The Riksbank's job, however, may soon get easier with ECB policymakers preparing for a gradual roll-back of monetary stimulus though rate hikes by the European bank still remain distant.
(Reporting by Simon Johnson, Johan Sennero and Daniel Dickson; Editing by Niklas Pollard and Mark Trevelyan)