The International Monetary Fund (IMF) has warned that continued increases in the prices of essential commodities could worsen poverty levels and deepen food insecurity in Nigeria, despite recent improvements recorded in the country’s macroeconomic outlook.
The warning was contained in the IMF’s July 2026 World Economic Outlook Update, which projected that Nigeria’s economy would expand by 4.1 per cent in 2026 and 4.3 per cent in 2027.
While acknowledging improvements in economic stability and favourable trade conditions, the Fund cautioned that rising costs of basic goods could reduce the benefits of ongoing reforms and leave many households vulnerable.
The IMF said in its report released on Wednesday, “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 noted that Nigeria’s growth outlook had remained unchanged from the IMF’s April projection, with the economy expected to maintain its recovery momentum despite challenges affecting households.
The Fund projected that economic growth in sub-Saharan Africa would remain steady at 4.3 per cent in 2026, although outcomes would differ among countries based on policy decisions, the pace of reforms and exposure to global shocks.
According to the IMF, countries in the region that depend heavily on imports, particularly oil-importing and non-resource-based economies, are expected to face greater pressure from rising energy and food costs.
It added that some larger economies had gained from earlier stabilisation measures but continued to face challenges, including reduced official development assistance and limited benefits from the global technology boom linked to artificial intelligence.
On the global outlook, the IMF forecast worldwide economic growth at 3.0 per cent in 2026 and 3.4 per cent in 2027, compared with an average growth rate of 3.5 per cent recorded in 2024 and 2025.
The Fund attributed the expected slowdown partly to the economic consequences of conflict in the Middle East, although increased investment in technology, driven by advances in artificial intelligence, could provide some support.
The IMF also raised concerns over renewed inflationary pressures caused by higher energy costs.
It stated, “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 recent forecasts indicated “the disinflation trend in place since the beginning of 2024 has stalled.”
The organisation identified renewed geopolitical tensions as the major threat to global economic stability, warning that further conflict in the Middle East could disrupt commodity markets, increase prices and place additional pressure on supply chains and financial conditions.
“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 rising energy costs would continue to affect food prices, estimating that crude oil prices would increase by 32 per cent in 2026 compared with 2025 levels, while natural gas prices were expected to rise by 22 per cent.
It also forecast a 26 per cent increase in fertiliser prices, with food prices expected to climb by eight per cent due to higher costs associated with energy, transportation and agricultural inputs.
The Fund warned that prolonged disruptions in energy and fertiliser markets could significantly worsen food insecurity, particularly in vulnerable regions.
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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.”
To address the impact of rising costs, the IMF advised governments against implementing broad fuel subsidies, tax reductions and price controls, describing such measures as costly and ineffective in reaching those most in need.
Instead, it recommended temporary and targeted assistance for vulnerable households alongside policies aimed at restoring price stability.
The Fund 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 further encouraged governments to rebuild fiscal reserves, improve tax collection systems, enhance spending efficiency and expand targeted social protection programmes to reduce the pressure of rising living costs while maintaining debt sustainability.
The warning comes amid rising inflation concerns in Nigeria, where headline inflation reportedly increased to 15.93 per cent in May 2026, representing the third consecutive monthly rise.
The organised private sector attributed the inflationary pressure to factors including geopolitical tensions in the Middle East, increased energy costs, insecurity and challenges affecting imports.
Data from the National Bureau of Statistics showed that inflation rose from 15.69 per cent in April to 15.93 per cent in May, continuing an upward trend that began in March after inflation declined slightly to 15.06 per cent in February.