UPDATE 1-Mauritius FinMin: 2013 inflation seen below c.bank forecast

Sat Apr 27, 2013 6:16am EDT

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PORT LOUIS, April 27 (Reuters) - Mauritius' annual average inflation rate in 2013 is expected to fall below the central bank forecast of 4.7 percent to 4.9 percent, Finance Minister Xavier Duval said on Saturday.

The rate is expected at 4.5 percent or 4.6 percent this year, Duval said, adding that the bigger concern is flagging economic growth in the Indian Ocean island state.

Mauritius cut growth forecast from 3.7 percent to 3.5 percent last month, citing deeper contraction in the construction industry.

"Macroeconomic priority should be given to growth as inflation is less a problem. But we need to remain vigilant on inflation," Duval told a news conference.

He said inflation was largely under control as shown by the 3.6 percent rate registered in March and compared to higher rates of 9.7 percent in 2008. The inflation rate was 3.9 percent in 2012.

Last month, central bank governor Rundheersing Bheenick said it was unlikely that interest rates would be lowered over coming months as this would have a negative impact on savings and inflation.

The bank held its key repo rate unchanged at 4.90 percent but forecast annual average inflation of 4.7-4.9 percent.

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