Malawians need to dig deeper in their pockets to buy basic necessities as inflation for the month of August accelerated by 3.8 percentage points in August to 25.5 percent as prices continue to rise in the economy.

An inflation update released by National Statistical Office (NSO) on Friday, shows that core inflation has gone up by 25.1 percent compared to 12.4 percent during the same period last year.

NSO said food inflation went up by 26.0 percent as compared to 2.4 percent during the same time last year.

It further said urban inflation went up from to 28.2 percent from 24.2 percent while rural inflation rose to 23.8 percent from 17.7 percent in July.

Finance Minister Ken Lipenga predicted inflation to average 18.4 percent in 2012 from an average of 7.6 percent in 2012 with the prospects of decelerating to 16.1 percent in 2013 as full recovery begins.

However, Reserve Bank of Malawi (RBM) Governor Charles Chuka said recently he expects inflation to be between 21 and 24 percent end-year with an average of between 17.5 percent and 19.8 percent for the year.

Investment management firm Nico Asset Mangers said in its August 2012 Monthly Economic Report that inflation is expected to continue rising in 2012 as a result of the liberalization of the exchange rate regime, which has raised the price of the US dollar by about 70 percent and has fueled imported inflation.

The IMF believes Malawi’s fiscal and monetary policies are expected to put inflation back on a downward path by early 2013.