Sudan inflation rises to 45 percent in Oct

Reuters, Thursday 8 Nov 2012

THe country's annual inflation reaches 45.3 per cent in October, up from 41.6 per cent a month earlier mainly driven by large increases in food prices

Sudan's annual inflation rate rose to 45.3 per cent in October from 41.6 a month earlier, driven mostly by large increases in food prices since last year which now seem to have stabilised, official figures showed on Thursday.

Prices have soared in Sudan since South Sudan seceded last year, taking with it three-quarters of the country's oil output. Petroleum was Sudan's main source of foreign currency, which it needs to support the Sudanese pound and pay for food and other imports.

Compared to September, however, prices of food and non-alcoholic beverages - the biggest component of Sudan's inflation index - edged down, the Central Statistics Offices said in its monthly bulletin. It put monthly inflation at just 0.2 per cent.

In a report issued this week, the International Monetary Fund (IMF) predicted Sudan's inflation rate would average about 30 per cent in 2012 because of "gradual fiscal consolidation" before easing to 17 per cent in 2013.

Sudan cut back fuel subsidies and took other austerity measures in June to plug a government budget gap.

The move ignited a series of small anti-government demonstrations, but they mostly petered out after a security crackdown and the beginning of the Muslim fasting month of Ramadan.

The IMF recommended Sudan continue with the reforms, which it said were "an important step toward restoring macroeconomic stability and reducing the economy's dependence on oil."

The group said Sudan's economic situation was nevertheless expected to remain "difficult" during the next 18 months because of South Sudan's secession and financing constraints.

Risks to Sudan's economy included the chance that tensions along the border with South Sudan could lead to an increase in military spending, putting pressure on the budget, the IMF said.

But deals signed over the last few months with South Sudan on oil, border and security that would open the way to restart the South's oil exports could give Sudan's finances a boost.

Landlocked South Sudan had shut down its entire output of about 350,000 barrels per day in January in a dispute with Khartoum over how much it should pay to export oil through Sudan.

The price of food and non-alcoholic drinks in Sudan's October index rose 48.6 year-on-year, but also edged down 0.1 per cent month-on-month, the inflation bulletin said.

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