Ethiopia is projected to record inflation of 12.1 percent in 2026, placing it among a group of African economies facing renewed price pressures driven by rising global energy and food costs, according to a joint policy brief assessing the economic fallout of the Middle East conflict.
The joint projection revealed by the African Development Bank, African Union, the United Nations Economic Commission for Africa and the UN Development Programme comes amid broader warnings that oil importing countries across Africa will experience mounting macroeconomic strain as global commodity prices surge.
The report indicates that Ethiopia’s inflation outlook aligns with a wider continental trend, where multiple economies are expected to post double digit inflation, including Egypt at 12.6 percent and Nigeria at 15.6 percent.
The document states that while oil-exporting countries such as Nigeria and Angola could benefit from higher oil prices, production challenges and global trade blockades may limit their ability to capitalize.
The inflationary pressures are linked primarily to sharp increases in global oil prices following disruptions in supply chains and trade routes.
According to the document, Africa’s total oil import bill stood at approximately USD 100 billion in 2024, and rising prices are expected to impose additional fiscal burdens on governments while driving up the cost of living for households.
The report states that net oil importer countries of the continent, a condition shared by the majority of African economies with 80 percent of countries on the continent dependent on imported oil, higher global prices are translating into increased import costs, exchange rate pressures, and inflation transmitted through domestic markets.
East Africa alone imported close to 530,000 barrels a day from the Middle East prior to the conflict, according to the report.
It notes that the import bill in net oil importing countries could rise, exerting depreciation pressure on their currencies, depleting foreign exchange reserves, and heightening the need for external support for fiscal stabilization and financing for development.
Conversely, fuel price increases are already feeding into broader price dynamics. The document notes that transportation costs account for between 30 percent and 50 percent of final food prices in many African markets. As a result, higher fuel costs are expected to push up food prices over subsequent months, reinforcing inflationary trends.
Beyond energy, the report highlights a second major inflation driver, fertilizer supply disruptions where approximately 30 percent of Africa’s fertilizer imports originate from or transit through the Gulf region, which has been affected by the ongoing conflict.
Iran alone accounts for about seven percent of fertilizer supplies to the continent.
The timing of these disruptions coincides with the March to May planting season in many African countries, raising concerns about agricultural output. The report warns that shortages and rising fertilizer prices could reduce productivity in the medium term, leading to higher food prices and exacerbating inflation.
At the household level, the impact is expected to be pronounced. Across Africa, poorer households spend between 50 percent and 60 percent of their incomes on food, making them particularly sensitive to price increases. Rising costs of energy, food, and agricultural inputs are therefore likely to intensify cost of living pressures.
The document warns that the shortage of fertilizers, compounded by the increase of
their prices will significantly affect output and productivity in the medium term and push up food prices, which would exacerbate hunger and malnutrition across the continent.
The joint assessment document has urged African countries to accelerate the development of local and regional fertilizer production systems to reduce agricultural vulnerability stemming from reliance on imports and exposure to external supply disruptions, with emphasis placed on building more resilient, locally anchored supply chains.
Its recommendations also highlight the need for increased investment in agricultural research, soil health, and integrated soil fertility management, alongside support for biofertilizers, biological inputs, and nitrogen-fixing crops.
The report also outlines broader macroeconomic risks tied to global trade disruptions. Instability in key maritime routes, particularly the Strait of Hormuz, is increasing freight costs and delivery times.
Shipping rerouting is estimated to extend transit times by 10 to 15 days and raise freight costs by 20 to 40 percent, contributing to higher import prices across the continent.
These disruptions are occurring alongside volatility in financial markets and exchange rates. The document noted that Since the onset of the conflict, multiple African currencies have depreciated against the US dollar, increasing the local currency cost of imports, including fuel, fertilizer, and food.
Despite these pressures, the report states that Ethiopia is also benefiting from specific logistical and strategic developments.
The country’s role in the Lamu Port South Sudan Ethiopia Transport (LAPSSET) corridor and its position as an aviation hub through Ethiopian Airlines are cited as areas of relative gain. However, these benefits are described as likely to be uneven and may not offset the wider inflationary, fiscal, and food-security pressures affecting the continent, according to the assessment.
