IMF sees rising prices worsening poverty in Nigeria

THE International Monetary Fund (IMF) has warned that higher prices of essential goods could deepen poverty and food insecurity in Nigeria, even as the country’s macroeconomic environment continues to improve.

The warning was contained in the IMF’s July 2026 World Economic Outlook Update, released on Wednesday. The Fund maintained its forecast that Nigeria’s economy would expand by 4.1 percent in 2026 and accelerate to 4.3 percent in 2027, but cautioned that rising living costs could erode the benefits of ongoing economic reforms.

According to the report, Nigeria has recorded stronger macroeconomic stability and benefited from favourable terms of trade, although households remain under pressure from increasing prices of basic necessities.

READ ALSO: IMF cautions Nigeria over planned $5bn borrowing deal with UAE bank

“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 projected that economic growth across sub-Saharan Africa would remain broadly stable at 4.3 percent in 2026, although outcomes would differ among countries depending on reform implementation, policy choices and exposure to external shocks.

It noted that oil-importing and non-resource-intensive economies in the region would be more vulnerable to rising energy and food prices, while some larger economies have benefited from earlier stabilisation efforts despite declining official development assistance and limited gains from the global artificial intelligence (AI) boom.

Globally, the Fund forecast economic growth of 3.0 percent in 2026 and 3.4 percent in 2027, compared with an average of 3.5 percent recorded in 2024 and 2025. It attributed the slower pace largely to the economic consequences of the conflict in the Middle East, although increased investment in AI is expected to cushion part of the impact.

The IMF also warned that inflationary pressures have intensified, projecting global headline inflation to rise from 4.1 percent in 2025 to 4.7 percent in 2026 before easing to 3.9 percent in 2027. It said the disinflation trend observed since early 2024 has stalled.

The Fund identified renewed geopolitical tensions as the biggest downside risk to the global economy, warning that an escalation of conflict in the Middle East could prolong commodity price volatility, disrupt supply chains, increase prices and tighten financial conditions.

It projected that crude oil prices would climb by 32 percent in 2026 relative to 2025, while natural gas prices would increase by 22 percent. Fertiliser prices are expected to rise by 26 percent, with food prices forecast to increase by 8 percent as a result of higher energy, transport and fertiliser costs.

The IMF further warned that prolonged disruptions in energy and fertiliser markets could significantly worsen food insecurity, particularly in low-income countries across sub-Saharan Africa and South Asia that rely heavily on smallholder farmers.

To mitigate the impact, the Fund advised governments against adopting broad-based fuel subsidies, tax cuts and price controls, saying such measures are costly and poorly targeted. Instead, it recommended temporary, targeted assistance for vulnerable households alongside policies that support price stability.

READ ALSO: CPPE backs IMF assessment of Nigeria reforms, warns against prolonged high interest rates

The IMF also urged countries to strengthen tax administration, improve public spending efficiency, rebuild fiscal buffers and expand targeted social protection programmes to help households cope with rising living costs while maintaining debt sustainability.

The warning comes as Nigeria’s inflation rate continues to edge higher. According to the National Bureau of Statistics (NBS), headline inflation rose to 15.93 percent in May 2026 from 15.69 percent in April, marking the third consecutive monthly increase after easing to 15.06 percent in February.