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Chile annual inflation speeds up in June to 1.9 percent

A resident collects dried fish, to be sold at the market, outside her home in Coronel town, some 550 km (335 miles) southwest of Santiago Ma
A resident collects dried fish, to be sold at the market, outside her home in Coronel town, some 550 km (335 miles) southwest of Santiago Ma

SANTIAGO (Reuters) - Chile's consumer price index rose 0.6 percent in June, the biggest increase in eight months and slightly above expectations as costs jumped for accommodation, electricity, fuel products and water, the government said on Saturday.

Analysts in a Reuters poll had forecast a 0.5 percent rise in prices.

Inflation in the 12 months through June was 1.9 percent, up sharply from 0.9 percent in May and approaching the central bank's target range of 2 percent to 4 percent.

Core inflation was 0.3 percent in the month and 1.3 percent in the year, the national statistics agency said.

The central bank on Monday cut its 2013 inflation outlook to 2.6 percent, down from a prior forecast of 2.8 percent, after inflation had declined steadily for several months.

The tame inflation along with lackluster growth in Chile's previously roaring economy have prompted bets the central bank will soon cut interest rates to stimulate the export-dependent country's growth.

The bank's latest poll of traders, released on June 26, showed the median forecast was for the benchmark interest rate to remain at 5 percent in July and be cut to 4.75 percent within three months. A separate poll on June 11, however, showed analysts expected a cut to 4.75 percent at Thursday's meeting.

The rate has remained on hold since a surprise cut to 5 percent in January 2012, though minutes show the bank has weighed the idea of easing at its last two monetary policy meetings.

Chile's statistics agency said a 13.7 percent jump in electricity prices in June was the biggest contributor to the rise in the CPI. Rental costs climbed 0.3 percent and gasoline prices were up 3.4 percent.

(Reporting by Felipe Iturrieta; Writing by Alexandra Ulmer and Louise Egan; Editing by Jackie Frank)

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