Overview

Nigerian financial markets took a turn for the worse during June, with both T-bill and equity markets delivering negative performances, while there was slight pressure on the I&E window exchange rate of the Naira. On macros, headline inflation rose to an 11-month high, increasing by 89bps to 17.71% y/y in May. Food inflation (+113bps to 19.50% y/y) rose to its highest level in eight months, while core inflation (+72bps to 14.90% y/y) rose to its highest level since March 2017, given the (1) unfavourable base effects from the prior year, (2) increasing transport costs, (3) below-average dry season harvest, (4) increasing diesel and aviation fuel prices, and (5) currency pressure.

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