UPDATE 2-Chile's annual inflation drops below 10%, lowest in over a year

(Adds graphic, economist comment) SANTIAGO, May 8 (Reuters) - Chile's annual rate of consumer price increases in April fell to its lowest in more than a year, data from statistics agency INE showed on Monday, dropping below the 10% level as economists project a monetary easing cycle to start in the coming months. Inflation in the world's largest copper producer hit 9.9% in the 12 months through April, the lowest since March 2022, slowing from the 11.1% reported in March although still well above the central bank's target range of 2% to 4%. Chilean inflation is expected to keep falling in the next months, with traders recently polled by the central bank forecasting it to hit 4.1% within a year, a scenario that could trigger interest rate cuts as soon as July. "Today's numbers will allow the central bank to breathe a sigh of relief, as they confirm that the disinflation is now underway," Pantheon Macroeconomics' Chief Latin America Economist Andres Abadia said. "Interest rate cuts are coming soon." The central bank has been holding its benchmark rate at 11.25% since October of last year as it tries to rein in stubbornly high inflation resulting from the country's rapid post-pandemic economic recovery. Economists at JPMorgan noted that core inflation, a key metric for policymakers, remained high but seemed aligned with the central bank's scenario, maintaining their call for monetary easing to start in early third quarter. "Though further risk premium decompression in political developments and negative sequential growth expected for 2Q23 make the June policy meeting a live one when it comes to policy action," they said. In April, according to INE, consumer prices in the Andean nation rose 0.3%, below market forecasts and decelerating from the 1.1% increase seen in the previous month. Economists polled by Reuters had expected a 0.4% rise last month. The monthly increase was driven by higher healthcare and transportation costs, which rose 1.5% and 0.8%, respectively, partially offset by a 1.7% drop in prices in the leisure category. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Chile inflation rate falls to a one-year low in April ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Natalia Ramos and Gabriel Araujo; Editing by Steven Grattan and Andrea Ricci)