South Sudan inflation eases to 65.6 pct in December

KHARTOUM (Reuters) - South Sudan's annual inflation rate eased to 65.6 percent in December from 78.8 pct in November as housing and water costs fell but food prices remained high, official data showed.

South Sudan became independent on July 9 under a 2005 peace agreement with its former civil war foe, Khartoum, but has been struggling to tackle an economic crisis and contain tribal and rebel violence.

Violence on both sides of the joint border has hampered trade with Sudan, from where much of the South's needs come, especially food supplies to northern regions.

Month-on-month inflation eased to 0.7 percent in December compared to 2.7 percent in November, the National Bureau of Statistics said on its website.

But costs for alcoholic beverages and tobacco rose by 55.6 percent in December, the data showed. Clothing costs rose by 28.2 percent.

The United Nations has warned the underdeveloped new nation faces severe food shortages this year because it will produce less than half what is needed in 2011 due to heavy rain and widespread violence.

Bilateral relations worsened in November when South Sudan accused Sudan of having halted oil exports going through the north. Khartoum has denied the charge.

Both countries also fought last month in a rare direct confrontation in a disputed border area.