IMF projects higher prices for essentials in Nigeria

The International Monetary Fund (IMF) has projected that Nigerians will face higher prices for essential goods in 2026, warning that the trend could worsen poverty and food insecurity despite improvements in the country’s macroeconomic stability.

The projection is contained in the IMF’s July 2026 World Economic Outlook (WEO) Update, published on the Fund’s official X account.

According to the report, Nigeria’s economic outlook is supported by improved macroeconomic stability and favourable terms of trade, but rising prices of essential commodities remain a major concern.

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“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 IMF stated.

The Fund attributed the outlook to the global energy crisis, which has pushed inflation higher across many economies, particularly those that are energy-intensive or heavily dependent on fossil fuel imports.

According to the report, global headline inflation is projected to rise 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 upward revision for 2026 was driven mainly by higher energy and food prices.

The IMF also revised its April 2026 inflation forecast upward by 0.3 percentage point for 2026 and 0.2 percentage point for 2027.

It explained that inflationary pressures would vary across countries due to factors such as exchange rate movements, persistent services inflation, labour market conditions and country-specific economic developments.

The report noted that core inflation is expected to return to target only gradually in several advanced economies, including the United Kingdom, Japan, the United States, and the euro area, while inflation in China is also expected to increase from current low levels.

On the global economic outlook, the IMF warned that renewed geopolitical tensions, particularly in the Middle East, remain the biggest downside risk.

It said any escalation of conflict could trigger higher commodity prices, supply shortages, exchange rate pressures and increased market volatility, thereby slowing global growth and fuelling inflation.

However, the Fund noted that a smoother reopening of the Strait of Hormuz than currently anticipated and lower commodity prices could improve global growth prospects while moderating inflation.

The report also highlighted artificial intelligence (AI) as a potential driver of stronger economic activity if investment in AI-related infrastructure remains robust. However, it cautioned that excessive optimism surrounding AI and buoyant financial markets could create macro-financial risks.

To strengthen economic resilience, the IMF urged countries benefiting from commodity windfalls and technological growth to avoid excessive spending and instead rebuild fiscal buffers through prudent debt management, stronger tax administration and efficient public expenditure.

It also recommended greater investment in infrastructure, education, renewable energy, digital technology and targeted social protection programmes to support sustainable economic growth.

The Fund stressed the need for international cooperation to address commodity market pressures, debt vulnerabilities and global trade challenges, warning against export bans, which it said distort markets, worsen supply shortages and increase global price volatility.

The IMF added that its lending programmes would continue to provide liquidity support to countries facing financial difficulties, while nations experiencing debt distress should pursue timely and orderly debt restructuring under the G20 Common Framework.