The International Monetary Fund (IMF) has warned that rising prices of essential goods could deepen poverty and worsen food insecurity in Nigeria despite improving macroeconomic conditions.
The warning is contained in the IMF’s July 2026 World Economic Outlook Update released on Wednesday.
The Fund projected Nigeria’s economy to grow by 4.1 per cent in 2026 and 4.3 per cent in 2027 but cautioned that higher living costs could undermine the benefits of ongoing economic reforms.
According to the report, Nigeria has continued to benefit from improved macroeconomic stability and favourable terms of trade, although many households remain vulnerable to rising prices.
“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 report said.
The IMF projected that economic growth across sub-Saharan Africa would remain broadly stable at 4.3 per cent in 2026, although performance would vary among countries depending on policy implementation and exposure to external shocks.
It said oil-importing and non-resource-intensive economies in the region were likely to face greater pressure from rising food and energy costs, while some larger economies had benefited from earlier stabilisation efforts.
The Fund retained its April forecast for Nigeria’s 2026 economic growth at 4.1 per cent and projected a further increase to 4.3 per cent in 2027.
Globally, the IMF forecast 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 impact of the conflict in the Middle East, although increased investment driven by advances in artificial intelligence was expected to partly offset the effect.
The Fund also warned that inflationary pressures had intensified following higher energy prices.
“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,” it said, adding that “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.
“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 stated.
The IMF projected that crude oil prices would rise by 32 per cent in 2026 compared with 2025, 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 climb by eight per cent because of higher energy, transport and fertiliser costs.
It warned that food insecurity could worsen if disruptions in energy and fertiliser markets persisted.
“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 report said.
The Fund advised governments against broad-based fuel subsidies, tax cuts and price controls, describing them as costly and poorly targeted.
“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,” it said.
The IMF also urged countries to rebuild fiscal buffers, strengthen tax administration, improve spending efficiency and expand targeted social protection programmes to cushion the impact of rising living costs while maintaining debt sustainability.
The latest warning comes as Nigeria’s headline inflation rate rose to 15.93 per cent in May 2026 from 15.69 per cent in April, marking the third consecutive monthly increase, according to data released by the National Bureau of Statistics.
