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SANTIAGO, Oct 8 (Reuters) - Consumer prices in Chile rose steeply in September, government data showed on Wednesday, pushing the annual rate to 4.9 percent, well above the central bank’s tolerance range.
Chile’s consumer price index rose 0.8 percent month on month in September, as prices for food, transportation and leisure increased, the government said.
Due to the ‘fiestas patrias’ week-long national holiday, September is traditionally a month of relatively high prices, but nevertheless inflation was greater than the market had predicted. Analysts expected a figure of 0.68 percent, according to a Reuters forecast.
Inflation in the 12 months to September was 4.9 percent, the sixth month in a row it was above the central bank’s 2 percent to 4 percent tolerance range, and the highest reading so far.
The Chilean peso has weakened nearly 12 percent against the U.S. dollar this year, making imports more expensive and driving up prices across the board.
The central bank has said it expects inflation to cool as the effects of an economic slowdown in Chile, the top copper exporter, begin to weigh.
However, the inflation reading has repeatedly surprised the market on the upside this year, and in the medium term the introduction of recently passed tax reform is expected to lead businesses to pass on some of their increased costs to consumers.
The high inflation has creating a quandary for the central bank as it sought to stimulate the economy through monetary easing, without fanning further price rises.
The bank has indicated it was close to ending its easing cycle, having cut the benchmark interest rate from 5.0 percent to 3.25 percent in the last year.
Core inflation was 0.6 percent in the month. (Reporting by Rosalba O‘Brien; Editing by Chizu Nomiyama and Jeffrey Benkoe)