The International Monetary Fund (IMF) has warned that rising prices of essential goods could deepen poverty and worsen food insecurity in Nigeria despite recent improvements in the country’s macroeconomic stability.
The warning was contained in the IMF’s July 2026 World Economic Outlook Update, which projected that Nigeria’s economy would grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, while cautioning that higher prices for basic necessities could offset some of the gains from ongoing economic reforms.
According to the Fund’s report released on Wednesday, Nigeria has continued to benefit from improved macroeconomic stability and stronger terms of trade, but households remain vulnerable to rising living costs.
The report read, “Nigeria is supported by improved macroeconomic stability and favourable terms-of-trade effects, though higher prices for essentials are expected to further aggravate poverty and food insecurity.”
The IMF noted that growth across sub-Saharan Africa was expected to remain broadly stable at 4.3 per cent in 2026, although performance would vary widely among countries depending on policy choices, reform implementation and exposure to external shocks.
It said oil-importing and non-resource-intensive economies in the region were likely to suffer more from rising energy and food prices, while some larger economies had benefited from earlier stabilisation efforts despite facing weaker official development assistance and missing out on much of the artificial intelligence-driven global technology boom.
The Fund retained its forecast for Nigeria’s economic growth at 4.1 per cent in 2026, unchanged from its April outlook, before projecting a further increase to 4.3 per cent in 2027.
Globally, the IMF projected economic growth of 3.0 per cent in 2026 and 3.4 per cent in 2027, compared with an average of 3.5 per cent in 2024 and 2025. It attributed the slowdown to the economic fallout from the war in the Middle East, although stronger technology investment driven by advances in artificial intelligence was expected to partly offset the impact.
The Fund also warned that inflationary pressures had intensified following higher energy prices. It said, “Global headline inflation is expected to increase from 4.1 percent in 2025 to 4.7 percent in 2026 before declining to 3.9 percent in 2027,” adding that the recent projections suggested “the disinflation trend in place since the beginning of 2024 has stalled.”
According to the IMF, renewed geopolitical tensions remain the biggest downside risk to the global economy. It warned, “The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions.”
The report projected that higher energy costs would continue to feed into food prices. The report estimated that crude oil prices would rise by 32 per cent in 2026 compared with 2025 levels, while natural gas prices would increase by 22 per cent. Fertiliser prices were forecast to rise by 26 per cent, with food prices expected to increase by eight per cent because of higher energy, transport and fertiliser costs.
The IMF further cautioned that food insecurity could deteriorate if disruptions in energy and fertiliser markets persisted. It said, “Food insecurity could worsen materially if disruptions in fertilizer and energy markets intensify or linger, especially in low-income countries in South Asia and sub-Saharan Africa, whose food supply is provided largely by smallholder farmers unable to outbid competitors from wealthier nations.”
The Fund advised governments to avoid broad-based fuel subsidies, tax cuts and price controls, arguing that such measures are expensive and often poorly targeted. Instead, it recommended temporary and targeted support for vulnerable households while maintaining policies aimed at restoring price stability.
The report stated, “Fiscal policy should avoid broad-based subsidies, tax cuts, and price controls, which are typically poorly targeted, fiscally costly, and politically difficult to unwind. If support is deemed necessary, it should be temporary, tightly targeted to vulnerable households, and embedded in a macroeconomic policy mix consistent with price stability.”
The IMF also urged countries to rebuild fiscal buffers, strengthen tax administration, improve spending efficiency and expand well-targeted social protection programmes to cushion the impact of rising living costs while preserving debt sustainability.
The PUNCH recently reported that Nigeria’s headline inflation rate rose to 15.93 per cent in May 2026, marking the third consecutive monthly increase in the annual inflation rate, as the organised private sector blamed geopolitical tensions in the Middle East, rising energy costs, insecurity and import bottlenecks for the worsening inflation.
The Consumer Price Index report released by the National Bureau of Statistics showed that inflation increased from 15.69 per cent in April to 15.93 per cent in May, extending a rebound that began in March after inflation fell slightly to 15.06 per cent in February.
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