(Recasts, adds detail, background, comment, peso reaction)
SANTIAGO, June 6 (Reuters) - Inflation in Chile rose to 4.7 percent in May on an annualized basis, to more than a five-year high.
The figure came in above the central bank’s target range of 2 percent to 4 percent, making the bank unlikely to continue monetary easing in the short-term
Consumer prices rose 0.3 percent in May, matching a Reuters forecast, as the cost of goods and services increased across the board, the government said on Friday. Clothing was the only sector to fall.
Chile’s inflation has accelerated from an annualized 1.5 percent in October largely because of a depreciation in the peso, which makes imported goods more expensive.
The bank has said it expects inflation to fall back later in 2014 as a rapidly cooling economy arrests price increases.
Finance Minister Alberto Arenas does not see an inflationary risk in Chile, he said in an interview last week.
In setting the benchmark interest rate, the central bank is juggling the need to stimulate the economy without fanning inflation. Having cut interest rates 100 basis points between October and March, it has since held fire.
“Although April’s economic activity reading of 2.3 percent gives reason for new monetary stimulus, because of doubts it has flagged in its last monetary policy meeting on the duration and causes of this high inflation, we predict the central bank will keep the rate at 4.0 percent on June 12,” said analysts at Credicorp Capital on Friday.
The peso rose 0.27 percent against the U.S. dollar as the high inflation reading led traders to bet against further monetary easing.
Reporting by Santiago newsroom, Writing by Rosalba O'Brien, Editing by W Simon and Steve Orlofsky