Ethiopia is facing renewed pressure on prices as global fuel and fertilizer costs rise, the International Monetary Fund said in its October 2026 Regional Economic Outlook Update for Sub-Saharan Africa. The IMF cautioned that disruptions to international energy markets could increase Ethiopia's import bills, raise transportation costs and squeeze household purchasing power. Global oil prices are projected to average $96 per barrel in 2026 before declining to $87 in 2027, but ongoing disruptions to refined petroleum supplies, particularly diesel, could sustain price pressures despite a gradual recovery.
Since Ethiopia imports petroleum products, higher international oil prices will increase demand for foreign exchange and raise operating costs across transportation, agriculture, manufacturing and trade, the IMF said. Fertilizer prices are expected to rise significantly, with global prices projected to increase by 26 percent in 2026 compared with 2025, potentially raising farmers' production costs and contributing to higher food prices later. Between February 23 and September 14, 2026, domestic gasoline prices reflected approximately 38 percent of corresponding international price increases, while diesel prices reflected around 44 percent, according to preliminary IMF estimates.
The IMF warned that inflationary pressures could persist even as global oil prices decline, as higher energy and agricultural input costs continue to affect domestic markets. The fund cautioned that broad-based fuel subsidies strain government budgets and disproportionately benefit wealthier households, recommending instead targeted support to vulnerable households and farmers. Ethiopia also faces risks from tighter international financing conditions and declining development assistance, with bilateral aid to sub-Saharan Africa projected to fall by a further 12 percent in 2026. Climate-related shocks including rainfall deficits and flooding could further undermine agricultural production and intensify food price pressures, the IMF added.