Overview

Nigeria’s equity market traded on a bullish note during the month of May as the market reacted positively to reforms announced by the new President. The exchange rate of the Naira in the I&E window remained little changed as the Central Bank of Nigeria continued to manage the currency within a narrow range.

Inflation remained elevated with data for April showing that prices had risen by 22.22% year-on-year, a headline inflation rate 18 basis points higher than the previous month. Food inflation rose by 18 basis points to 24.61% year-on-year while core inflation expanded faster by 28 basis points to 20.14% year-on-year. While headline inflation continued to be impacted by structural issues such as insecurity, elevated commodity prices, fuel scarcity, and exchange rate pressure,  among others., we believe the onset of the Ramadan and Easter periods also impacted food prices.

The Monetary Policy Committee (MPC) hiked the benchmark MPR rate by another 50bps to 18.5% in its May meeting citing the need to curtail an elevated inflation environment.

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