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SANTIAGO, July 8 (Reuters) - Chile's inflation picked up pace in June, beating expectations, and will probably help to keep the benchmark interest rate on hold for longer than anticipated despite persistently weak economic growth.
The consumer price index rose 0.5 percent in June, above a Reuters forecast for a 0.3 percent uptick, as prices for transportation, housing and basic services increased, the government's statistics agency said on Wednesday.
Inflation in the 12 months to June was 4.4 percent, above the central bank's 2 percent to 4 percent target range. Core inflation was 0.5 percent in June.
"The broad-based re-acceleration of inflation in June is a concerning sign, especially because it took place against a backdrop of softening growth," said Goldman Sachs economist Tiago Severo.
Central bank data showed on Monday that Chile's economic activity rose 0.8 percent in May from a year earlier, much slower than expected. This raises questions about the pace of economic recovery in the top copper exporter.
That same day, Chile's government cut its forecast for 2015 economic growth to 2.5 percent from 3.6 percent as the economy has taken longer than expected to rebound.
"We expect inflation to moderate again in coming months, helped by the slowdown in wage growth and greater slack in the labor market," added Severo. "However, renewed depreciation pressures on the Chilean peso add risks to this projection."
This week, Chile's peso weakened to a nearly 6-1/2 year low against the U.S. dollar.
Traders polled by the central bank have scaled back their expectations for a rate hike and now see the benchmark interest rate on hold at 3.0 percent through at least July 2016.
Despite weak economic growth, the surprise jump in inflation will likely prompt the bank to maintain its current stance on interest rates, said CorpResearch in a note to clients. (Reporting by Anthony Esposito; Editing by Lisa Von Ahn)