Morganable Government/Policy
The IMF noted that while reforms aimed at stabilising the economy have begun to yield results, they have not yet translated into relief for many Nigerians struggling with the cost-of-living crisis
kaNo —
Nigeria’s economic recovery could face fresh strain as rising prices of essential goods threaten to deepen poverty and worsen food insecurity, the International Monetary Fund has warned.
In its July 2026 World Economic Outlook Update, the IMF said that although Nigeria’s macroeconomic conditions have shown signs of improvement, increasing living costs are eroding the benefits of recent reforms and exposing households to heightened vulnerability.
The report projected that Africa’s largest economy would grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, maintaining the same forecast issued in April.
“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 stated.
The IMF noted that while reforms aimed at stabilising the economy have begun to yield results, they have not yet translated into relief for many Nigerians struggling with the cost-of-living crisis.
Food inflation, in particular, remains a major concern as millions of households spend a significant portion of their income on basic consumption.
The warning comes amid persistent inflationary pressures in the country.
Data from the National Bureau of Statistics showed that Nigeria’s headline inflation rose to 15.93 per cent in May 2026, marking the third consecutive monthly increase.
The figure climbed from 15.69 per cent in April and 15.06 per cent in February, reversing an earlier decline.
Economic analysts and members of the organised private sector have attributed the surge in inflation to a combination of factors, including geopolitical tensions in the Middle East, rising energy prices, insecurity in food-producing regions and import bottlenecks.
These pressures have continued to push up the prices of staple foods and transportation, worsening the burden on consumers.
It said improved macroeconomic stability and stronger terms of trade, particularly from higher crude oil prices would support growth in the medium term.
However, it emphasised that the benefits of this growth would not be evenly distributed unless inflation is effectively managed and social protection systems are strengthened.
Across sub-Saharan Africa, the IMF projected that economic growth would remain broadly stable at 4.3 per cent in 2026.
However, it noted that performance across the region would vary significantly depending on policy decisions, the pace of reforms and exposure to global shocks.
According to the report, oil-importing and non-resource-intensive economies are likely to suffer the most from rising global energy and food prices.
On the global stage, the IMF revised its growth forecast downward, projecting expansion of 3.0 per cent in 2026 and 3.4 per cent in 2027, compared with an average of 3.5 per cent recorded in 2024 and 2025.
The slowdown was largely attributed to the economic fallout from the ongoing conflict in the Middle East.
The report warned that renewed geopolitical tensions remain the biggest downside risk to global economic stability.
“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 IMF said.
Inflationary pressures are also expected to intensify globally, driven largely by higher energy costs.
The Fund projected that global headline inflation would rise from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027, indicating that the disinflation trend observed since early 2024 has stalled.
A key driver of rising prices, according to the IMF, is the expected increase in energy and input costs.
Crude oil prices are projected to surge by 32 per cent in 2026 compared with 2025 levels, while natural gas prices could rise by 22 per cent.
These developments have significant implications for countries like Nigeria, where agriculture remains heavily dependent on smallholder farmers who are highly sensitive to input costs.
The IMF warned that persistent disruptions in energy and fertiliser markets could further strain food production and availability.
“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 noted.
It argued that such measures are often costly, inefficient and difficult to reverse.
Instead, the Fund recommended targeted interventions aimed at protecting the most vulnerable populations.
It urged policymakers to implement temporary and well-focused support measures, while maintaining a broader macroeconomic framework that prioritises price stability.
“Fiscal policy should avoid broad-based subsidies, tax cuts, and price controls, which are typically poorly targeted, fiscally costly, and politically difficult to unwind,” the IMF stated.
“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 called on countries to rebuild fiscal buffers, improve tax administration and enhance spending efficiency.
Expanding social protection programmes, it said, would be critical to cushioning the impact of rising living costs without undermining debt sustainability.
Commenting on the regional outlook, IMF Research Department Division Chief, Deniz Igan, said sub-Saharan Africa’s economic prospects had been clouded by the ripple effects of the Middle East conflict, despite strong growth recorded in 2025.
