UPDATE 2-Brazil consumer prices rise more than expected in month to mid-May

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(Adds context, economist comment)

By Gabriel Araujo and Camila Moreira

SAO PAULO, May 24 (Reuters) - Brazilian consumer prices rose more than expected in the month to mid-May, statistics agency IBGE said on Tuesday, marking the sharpest jump for the period in six years as the country grapples with galloping inflation.

The IPCA-15 consumer price index rose 0.59% in the month, according to IBGE.

That was down from 1.73% in the previous month as the central bank has raised interest rates aggressively, but still above expectations of a 0.45% rise in a Reuters poll.

Brazil's benchmark rate currently stands at a five-year high of 12.75% as the central bank hiked it by a full percentage point earlier in May, flagging a smaller increase next month.

But economists already see the higher-than-expected consumer price figures as a signal that hikes will not stop just yet.

"Today's IPCA-15... will probably trigger upward revisions for both May and full-year figures," said Carlos Macedo, an economist at brokerage Warren.

"This will make the central bank's job on monetary policy even more difficult. As a consequence, they probably won't halt rate hikes at the next meeting."

Laiz Carvalho, Brazil economist at BNP Paribas, expects rates to be raised at least two more times, reaching 14.25% by year-end.

"Given the upward inflationary pressure, we think there is no way for the central bank to stop hiking rates so quickly," she said.

Inflation in the 12 months to mid-May hit 12.20%, up from 12.03% in mid-April and the highest level for the period since November 2003. Analysts had expected it to remain at 12.03%.

The central bank has a target range of 3.5% for full-year inflation in 2022, with a tolerance margin of 1.5 percentage point.

Prices for eight of nine categories of products and services surveyed were up in mid-May. The biggest impact came from transportation, with costs up 1.8%, even though decelerating from the 3.43% increase seen a month ago. (Reporting by Gabriel Araujo and Camila Moreira Editing by Bernadette Baum and Rosalba O'Brien)

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