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Marcus concerned by inflation

Reserve Bank Governor Gill Marcus said the rising petrol price will also drive inflation up.

Gill Marcus says she is worried the rising petrol price will also drive inflation up.

PRETORIA - Reserve Bank Governor Gill Marcus on Wednesday said higher salaries and the exchange rate were pushing inflation up.

She said this made it difficult for the bank to consider lowering rates to boost the economy.

Marcus announced that the bank's Monetary Policy Committee (MPC) decided to keep rates on hold at five percent.

The prime lending rate will also remain unchanged at 8.5 percent.

The governor added the bank expected the economy to grow by only at 2.7 percent in 2013.

Marcus said the rising petrol price will also drive up inflation.

"Although global oil prices have declined over the past few weeks, resulting in the over recovery of the petrol price, it is unlikely to be sufficient to reverse the adverse exchange rates."

Meanwhile, Stanlib chief economist Kevin Lings said the value of the rand is also coming under pressure.

"The concern now is currency risk, which has been under pressure."