Chilean inflation accelerated more than economists expected in May to the highest in more than 13 years, raising speculation the central bank will lift interest rates this month. The peso rose following the news. Consumer prices climbed 8.9 percent in the 12 months to May. Last month alone prices rose 1.2 percent, the National Statistics Institute said today in Santiago.

Chile’s peso gained the most in almost three months after consumer prices rose in May more than economists forecast, boosting speculation the central bank will raise interest rates to stem inflation.

The peso climbed after the report. Chile’s currency advanced the most since March 11, jumping 1.6 percent to 480.51 per dollar at 4:59 p.m. New York time, from 488.5 yesterday.

In a separate report, the central bank said Chile’s economy expanded at a seasonally adjusted 4.1% percent annual rate in April. As can be seen below the Chilean economy has now been slowing steadily since last summer.

The 4.25 percentage-point difference between the Chilean and U.S. benchmark lending rates, along with gains in copper, the nation’s biggest export, has helped fuel a 9.5 percent increase in the Chilean peso in the past 12 months.

Banco Central de Chile, which last raised the overnight lending rate in January to a six-year high of 6.25 percent, next meets on June 10. Minutes released earlier this week show policy makers considered a quarter-percentage point rate increase at their May 8 meeting, before unanimously voting to leave the target rate unchanged.

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