By Hereward Holland

JUBA, Feb 5 (Reuters) - South Sudan's inflation rate accelerated to 35 percent in January as food prices surged, data showed on Tuesday, highlighting the need for a deal with Sudan to restart cross-border oil flows.

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 into turmoil. Oil used to make up 98 percent of state income.

While the inflation rate shot up in January from 25 percent in December it was below 41 percent seen in November.

One of the world's least developed nations, South Sudan needs to import almost everything. Most parts of the country, which is the size of France, can be reached only on bad roads which are sometimes impassable.

In September, Juba and Khartoum signed security and economic deals to resume the South's oil exports though Sudan but both have been unable to agree on a demilitarized zone along their disputed border, a condition for Sudan to restart oil flows.

Resumed oil production would give South Sudan access to more hard currency to pay for imports and the overall economic situation would improve, analysts say.

Month-on-month prices rose by 7.9 percent in January, the National Bureau of Statistics said in its monthly bulletin.

Food prices, which make up almost 72 percent of the inflation index, jumped 33.3 percent in January year-on-year, the data showed. The cost of alcoholic beverages and tobacco soared 231.4 percent.

Annual inflation was 37.8 percent in Malakal, a town in the north of South Sudan hit hard by the closure of the border with Sudan since southern secession in 2011.

Sudanese traders used in the past to supply much of the north of South Sudan with food which is now imported for a premium on bumpy roads from Kenya and Uganda.

Inflation in Sudan, a much bigger economy is even worse, running at 44.4 percent in December, according to the latest data, as the country battles its worst economic crisis in decades due to the loss of oil production to South Sudan.

(Reporting by Hereward Holland; Editing by Ulf Laessing and Susan Fenton) Keywords: SOUTHSUDAN INFLATION/

(ulf.laessing@thomsonreuters.com)(Reuters Messaging: ulf.laessing.reuters.com@reuters.net)

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