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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 signs of improving macroeconomic stability.
The warning is contained in the IMF's July 2026 World Economic Outlook (WEO) Update, which noted that while Nigeria's economy is benefiting from stronger macroeconomic stability and favourable terms of trade, rising prices of basic commodities remain a major challenge.
According to the Fund, increasing costs of essential goods are expected to place additional pressure on vulnerable households, potentially reversing gains in economic recovery.
"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 report linked the inflationary outlook to the global energy crisis, which has continued to drive up inflation in many countries, particularly economies that rely heavily on imported fossil fuels or are energy-intensive.
Globally, the IMF projects headline inflation to increase from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027. The upward revision reflects expectations of higher energy and food prices, with the Fund raising its April 2026 inflation forecast by 0.3 percentage point for 2026 and 0.2 percentage point for 2027.
The report noted that inflation trends would differ across countries due to exchange rate movements, labour market conditions, persistent services inflation and other domestic economic factors. It added that core inflation is expected to decline only gradually in several advanced economies, including the United Kingdom, the United States, Japan and the euro area, while inflation in China is also projected to rise from current low levels.
On the global outlook, the IMF identified renewed geopolitical tensions, particularly in the Middle East, as the biggest downside risk to the world economy. It warned that any escalation of conflict could disrupt commodity supplies, raise energy prices, weaken currencies, increase market volatility and slow global economic growth.
However, the Fund said global growth prospects could improve if tensions around the Strait of Hormuz ease more quickly than expected and commodity prices moderate.
The IMF also identified artificial intelligence (AI) as a potential catalyst for stronger global economic growth, provided investment in AI infrastructure remains strong. It cautioned, however, that excessive optimism over AI and buoyant financial markets could pose macro-financial risks.
To improve economic resilience, the IMF urged governments benefiting from commodity revenues and technological growth to pursue prudent fiscal policies by strengthening debt management, improving tax administration and ensuring efficient public spending. It also recommended increased investment in infrastructure, education, renewable energy, digital technology and targeted social protection programmes.
The Fund further called for stronger international cooperation to tackle commodity market pressures, debt vulnerabilities and global trade challenges. It warned against export restrictions, saying such measures distort markets, worsen supply shortages and fuel price volatility, while reaffirming its commitment to supporting financially distressed countries through its lending programmes and orderly debt restructuring under the G20 Common Framework.
