A rise in food and energy costs has pushed consumer prices up globally, including in major wheat and rice importer Iraq, but state spending on a food ration scheme that supplies 60 percent of Iraqis has helped cushion the blow.

"I believe the inflation rate will stay in single digits," Mudher Kasim, a senior adviser at Iraq's central bank, told Reuters in an interview.

"There is still a food ration programme which absorbs part of the increase of foodstuff prices.

Also, the central bank always has measures to confront inflation," he said.

Iraq's core annual inflation in February rose to 5.5 percent from 5.3 percent in January, mainly due to a rise in power, rental and housing costs.

The March figure has not yet been released.

Kasim said Iraq's interest rate was currently stable at 6 percent but said the central bank was monitoring it closely as it wanted to keep the interest rate above the core inflation rate.

"Currently there is neither change in the interest rate nor in the exchange rate price, they are stable but we are monitoring the development of inflation," Kasim said.

Iraq last cut its interest rate by 100 basis points to 6 percent last April.

The central bank has fixed the country's exchange rate at 1,170 Iraqi dinars to $1.

Iraq's economy, which has been slow to get back on its feet after decades of war and sanctions, is dominated by oil, which accounts for more than 95 percent of government revenues. The bank defines core inflation as excluding expenditure on fuel.