The International Monetary Fund (IMF) has warned that increasing prices of essential goods could undermine Nigeria’s progress in reducing poverty and worsen food insecurity, despite signs of improved macroeconomic stability.
In its July 2026 World Economic Outlook Update, the IMF projected Nigeria’s economy to grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, but cautioned that the rising cost of basic necessities could erode the benefits of ongoing economic reforms.
According to the report, Nigeria has recorded improvements in macroeconomic stability and benefited from favourable terms of trade. However, the Fund stressed that many households remain under pressure from the increasing cost of living, with higher prices for essential goods expected to deepen poverty and food insecurity.
Across sub-Saharan Africa, the IMF expects economic growth to remain relatively stable at 4.3 per cent in 2026, although outcomes will differ among countries depending on economic policies, reform implementation and vulnerability to external shocks.
The Fund noted that oil-importing and non-resource-intensive economies are likely to face greater challenges from rising energy and food prices, while some larger economies have benefited from earlier stabilisation measures despite reduced development assistance and limited participation in the global artificial intelligence-driven technology boom.
Globally, the IMF forecast economic growth of 3.0 per cent in 2026 and 3.4 per cent in 2027, lower than the average recorded in 2024 and 2025. It attributed the slowdown largely to the economic consequences of the ongoing conflict in the Middle East, although increased investment in artificial intelligence is expected to provide some support to global growth.
The report also projected a temporary rise in global inflation, with headline inflation expected to increase from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027. It noted that the decline in inflation observed since early 2024 has slowed due to higher energy prices.
The IMF identified renewed geopolitical tensions, particularly in the Middle East, as a major threat to global economic stability, warning that prolonged conflicts could disrupt supply chains, increase commodity price volatility and tighten global financial conditions.
The Fund further projected that crude oil prices could rise by 32 per cent in 2026, while natural gas and fertiliser prices may increase by 22 per cent and 26 per cent, respectively. As a result, global food prices are expected to climb by about eight per cent, driven by higher energy, transportation and fertiliser costs.
According to the report, prolonged disruptions in energy and fertiliser markets could significantly worsen food insecurity, especially in low-income countries across sub-Saharan Africa where smallholder farmers are particularly vulnerable.
To address these challenges, the IMF advised governments against implementing broad fuel subsidies, tax reductions and price controls, arguing that such measures are often expensive and ineffective. Instead, it recommended targeted and temporary support for vulnerable households while maintaining policies aimed at ensuring price stability.
The Fund also urged governments to strengthen tax administration, improve public spending efficiency, rebuild fiscal buffers and expand well-targeted social protection programmes to cushion the impact of rising living costs while safeguarding long-term fiscal sustainability.
