Fuel Prices Double and Inflation Hits 6.3% as Middle East War Reaches Somali Households

MOGADISHU — Somalia’s headline inflation accelerated to 6.3 percent in the first quarter of 2026, up from 5.1 percent in the fourth quarter of 2025, as domestic fuel prices more than doubled following the outbreak of conflict in the Middle East, according to the Central Bank of Somalia’s Quarterly Economic Review.

The Central Bank projects headline inflation will average 5.9 percent for the full year 2026, a sharp increase from 3.7 percent in 2025. The acceleration marks a reversal of the relatively benign price environment Somalia experienced through much of last year, when inflation remained between 2.7 and 3.9 percent.

Fuel Prices More Than Double

The primary driver has been fuel. Domestic fuel prices rose from approximately US$0.60 per litre to roughly US$1.50 per litre, driven by disruptions in the Strait of Hormuz. This generated broad-based cost-push pressures across transport, food, and utilities.

At the global level, the IMF’s April 2026 World Economic Outlook projected global headline inflation to rise from 4.1 percent in 2025 to 4.4 percent in 2026, an upward revision of 0.6 percentage points from its January forecast. The FAO Food Price Index rose 3.4 percent quarter-on-quarter, from 124.3 points in December 2025 to 128.5 points in March 2026, with the Vegetable Oil Price Index reaching its highest level since mid-2022.

Drought Adds Domestic Pressure

The energy shock has been compounded by domestic supply-side disruptions. The failed Deyr rains reduced agricultural output and pushed food prices higher, creating a reinforcing cycle of cost-push pressures from three concurrent shocks: drought, global energy prices, and Somalia’s continued high dependence on imported foodstuffs.

Food imports remained the largest single import category in the first quarter at US$472.02 million, accounting for 19 percent of total imports. While food imports declined 8 percent year-on-year, the price effect of higher fuel and transport costs fed through to household budgets.

Data from the FSNAU and the Central Bank show cereal prices rising across major urban markets. In Mogadishu, the price of white sorghum rose from US$0.59 per kilogram in October 2025 to US$0.68 in March 2026, while local sesame oil increased from US$2.46 to US$2.86 per litre over the same period.

Household Impact

The inflation acceleration is projected to cause a marked deterioration in household welfare across both urban centres and rural agropastoral regions, according to the Central Bank. With 6.5 million people already facing high levels of acute food insecurity, as detailed in FTL Somalia’s reporting on the drought crisis, higher food and fuel costs are intensifying pressure on already stretched households.

Private consumption, underpinned by remittance inflows, remained the principal driver of domestic demand during the quarter. Remittances totalled US$1,587.9 million in the first quarter, a 6 percent decline from the same period in 2025 but still substantial enough to support household consumption.

Critical Note

The Central Bank’s inflation figures confirm that the Middle East conflict has reached Somali households through the fuel pump. A doubling of fuel prices is not an abstract economic statistic. It translates directly into higher transport costs, higher food prices, and reduced purchasing power for families already facing drought and declining remittances.

The projected 5.9 percent annual inflation rate is the highest in years, but the quarterly figure of 6.3 percent is more telling. It reflects the speed at which external shocks transmit to Somalia’s import-dependent economy. The country has no domestic refining capacity, no strategic fuel reserves, and limited fiscal space to cushion the impact through subsidies.

The Central Bank’s report acknowledges these vulnerabilities but does not outline a policy response. Monetary policy tools are limited in a highly dollarised economy, and the government’s fiscal position is already strained. The burden of adjustment falls on households, which is where the inflation figures will be felt most acutely.