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South Sudan inflation eases

Jan 07 2013 19:09 Reuters

(Ed Andrieski, AP)

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Juba - Inflation in South Sudan dropped sharply in December, easing pressure on an economy reeling from a dispute with neighbouring Sudan which shut down its vital oil industry.

Annual inflation dropped to 25.2% in December after reaching 41% in November due to a fall in food prices, official data showed on Monday.

South Sudan won independence from Sudan in 2011 after one of Africa's longest civil wars, but a dispute between the two paralysed the South's oil industry a year ago, throwing the economy in turmoil as oil used to make up 98% of state income.

One of the world's least developed nations, South Sudan needs to import almost everything. Inflation figures tend to fluctuate widely as trucks struggle to deliver supplies to the landlocked country on time. Most parts of the country, the size of France, can be reached only on bad roads which are sometimes impassable.

Food and non-alcoholic goods prices, which make up almost 72% of the index, eased by 14.1% in December compared to November, the data showed. Hotel and restaurant costs fell by 7.2%.

Some local analysts say inflation is actually higher than the official figures, especially in northern areas which used to get supplied from Sudan until the border got closed in 2011. Annual inflation in Malakal near the Sudan border was 26.2% in December.

In September, the two sides signed trade and oil deals to resume oil exports from the South though Sudan but both have been unable so far to set up a demilitarized border zone as condition for oil flows.

Stalled talks have delayed the resumption for oil exports until at least mid-March, South Sudan's oil minister said last week. The initial plan had been for crude to hit markets by January.

Both countries still need to reopen the border as agreed in September. Cross-border trade had largely stopped ahead of South Sudan's secession, severing historic supply routes to the north.

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