The National Bureau of Statistics reported headline inflation in June 2023 as 22.79% YoY (vs 22.41% YoY in May 2023). While we anticipated an uptrend, the headline inflation comes in 104bps lower than our forecast of 23.83%. This upward trend in inflation can be attributed to an unabating increase in both food and core indices. The food index spiked by 25.25% YoY (vs 24.82% YoY in May 2023), owing to rising prices of food items such as oil and fat, bread and cereals, fish, yam, and other tubers, meat, vegetable, milk, cheese, and eggs. Similarly, core inflation stood at 20.27% YoY, a 21bps increase from 20.06% YoY in May 2023. This was primarily driven by increased prices of air and road transport services, gas, vehicle spare parts, fuels, lubricants for personal transport equipment, and medical services. On a month-on-month comparison, the headline and food index sustained their northward trend rising by 2.13% and 2.40% in June 2023 (vs 1.94% and 2.19% in May 2023), respectively. Surprisingly, the core index grew at a slower pace by 1.74% in June 2023 from 1.81% in May 2023. As a result of this uptick and in tandem with the Central Bank’s focus on price stability, we expect the monetary policy committee in its next meeting (25th of July) to maintain its hawkish stance and raise the monetary policy rate by 50bps.
