By Chris Nwankwo
Nigeria's economy may
continue to expand over the next two years, but millions of households could
still face tougher living conditions as the rising cost of everyday essentials
threatens to erase many of the benefits of ongoing economic reforms.
That is the latest
warning from the International Monetary Fund (IMF), which says inflation
remains one of the biggest challenges confronting Nigeria, particularly for
low-income families struggling to afford food and other basic needs.
In its July 2026 World Economic Outlook
Update, released on Wednesday, the global financial institution
maintained its projection that Nigeria's economy will grow by 4.1 per cent in 2026
before improving slightly to 4.3 per cent in 2027. However, the Fund stressed that
stronger economic growth alone will not automatically translate into better
living standards if the prices of essential goods continue to rise.
According
to the report, Nigeria has recorded improvements in macroeconomic stability and
has also benefited from more favourable global trade conditions. Even so, the
IMF believes ordinary families remain under intense pressure because the cost
of food, transport and other necessities continues to climb.
The
Fund noted that while recent economic reforms have helped strengthen the
broader economy, the gains risk being overshadowed by persistent inflation,
warning that higher prices could worsen poverty and increase food insecurity
across the country.
It
stated that although Nigeria's economic outlook remains positive, many
households are still finding it increasingly difficult to cope with the rising
cost of living.
Looking
beyond Nigeria, the IMF expects economic growth across sub-Saharan Africa to remain
steady at 4.3 per cent in 2026.
However, it said not every country in the region will experience the same level
of success, as outcomes will depend on government policies, the pace of reforms
and each country's exposure to global economic shocks.
The report
explained that countries heavily dependent on imported fuel and those without
significant natural resources are likely to feel the greatest pressure from
rising global energy and food prices.
It
added that while some of Africa's larger economies have benefited from earlier
economic stabilisation efforts, many are also facing declining international
development assistance and have yet to enjoy much of the economic boost coming
from the rapid global expansion of artificial intelligence-driven technologies.
On the
global stage, the IMF forecast that the world economy will grow by 3.0 per cent in 2026
and 3.4 per cent in 2027,
down from the average growth of 3.5 per cent recorded in 2024 and 2025.
The
organisation linked the slower pace largely to the economic impact of the
ongoing conflict in the Middle East. It noted, however, that increased
investment in artificial intelligence and other advanced technologies could
help soften some of the damage.
The IMF
also warned that inflation remains a worldwide concern. It projected global
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.
According
to the report, the steady decline in inflation seen since early 2024 has
stalled as higher energy costs continue to push up prices across many sectors.
The
Fund identified renewed geopolitical tensions, especially in the Middle East,
as the biggest threat to the global economy. It warned that any fresh
escalation could trigger further disruptions to supply chains, increase
commodity prices, tighten financial conditions and create additional
uncertainty for businesses and governments.
The
report expects crude oil prices to rise by 32 per cent in 2026 compared with
2025 levels. Natural gas prices are also forecast to increase by 22 per cent,
while fertiliser prices could climb by 26 per cent.
Those
increases, the IMF said, are likely to feed directly into food production
costs, leading to an estimated eight per cent rise in global food prices as farmers and
food producers pay more for fuel, transportation and agricultural inputs.
The
Fund warned that food insecurity could become significantly worse if
disruptions in energy and fertiliser supplies continue, particularly in
low-income countries across sub-Saharan Africa and South Asia, where many
small-scale farmers cannot compete with wealthier buyers for essential farm
inputs.
To
cushion the impact, the IMF advised governments against introducing broad fuel
subsidies, blanket tax reductions or widespread price controls, arguing that
such measures are costly, often fail to reach those most in need and are
difficult to withdraw later.
Instead,
it recommended carefully targeted and temporary support for vulnerable
households while maintaining policies that keep inflation under control. It
also urged governments to strengthen tax collection, improve public spending,
rebuild fiscal reserves and expand social protection programmes in a way that
protects public finances.
The warning comes as Nigeria continues to grapple with
rising prices. Recent figures showed the country's headline inflation rate
climbed to 15.93 per cent in May 2026,
marking the third consecutive monthly increase. Business groups have blamed the
worsening inflation on the conflict in the Middle East, rising energy costs,
insecurity and persistent import bottlenecks, all of which continue to place
additional pressure on consumers and businesses alike.
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