FRANKFURT (Reuters) - Munich Re said reinsurance rates were set to rise across the industry, caused by inflation, higher interest rates and a decline in capital to underpin underwriting activity.

In a statement on Sunday, the German group said reinsurance capacity, or the industry's financial ability to take on risks, was on the decline while demand for contracts was growing, causing rates to trend higher.

"Reinsurance capacity declines as demand grows – further hardening of the market (is) apparent," it said.

It added it was firmly on track to meet its 2025 strategy targets.

(Reporting by Ludwig Burger and Alexander Huebner;Editing by Elaine Hardcastle)