Recent data on Consumer Price Index (CPI) indicates significant increase in general price level for the sixth consecutive month. Headline inflation increased by 0.9 percentage points from 15.6 per cent recorded in May to 16.5 percent in June the highest rate recorded since October 2005 (an 11-year high). The core sub-index increased from 15.1 percent to 16.2 percent while the food sub-index stood at 15.3 percent, an increase of 0.4 percent from the preceding month of May. Higher prices of domestic/imported food and other items, as well as increased energy cost were major drivers of the increase. This is probably explained by the exchange-rate pass-through, given the significant depreciation of the naira.

Power sector analysis shows an increase in power generated by 3.01 percent from 2903.5mw to 2991.8mw between July 1, 2016 and July 8, 2016, with a peak of 3260.8mw on July 5, 2016. This is however, still below the highest (5074.7mw) recorded in February, 2016. The increase reflects improved use of hydro (water) for power generation. The easing out of gas constraint occasioned by recent pipeline repairs have also contributed to the increase in power generation. Improvements in power generation would be sustained if hydro measures are complemented with fast-tracked repairs on damaged gas channels and intensified efforts at tackling pipeline sabotage.

OPEC weekly basket price decreased marginally from $45.95 on June 24, 2016 to $45.26 on July 1, 2016,while Nigerias bonny light fell by $1, from $48.90 to $47.91. The apparent decline in crude oil price was driven by lingering market demand uncertainty, following the unexpected Brexit referendum. More so, ease in supply disruptions in Nigeria and Canada may have contributed to the downward pressure on prices. Going forward, until there is greater regulatory precision on global oil output levels, prices may likely remain stuck or continue to exhibit a downward trend. Although, Nigerias fiscal constraints slightly relaxed with oil production increasing in the review week (following repairs on sabotaged pipeline channels), potential global crude oil oversupply threatens governments revenues. However, oversupply threats could be reduced if there is a consensus on oil production quotas in the upcoming OPEC meeting.

Over the past years, basic education in Nigeria has experienced mixed performance. On the positive side, school enrolment has increased and gender disparity in primary education has been reduced significantly in line with MDGs targets. However, educational outcomes remain weak on various indicators of quality and equity. For example, quality of education in Nigeria was ranked 124th out of 144 countries on the Global Competitiveness Index in 2015. Also, van Fleet et al. (2012) finds that 58.3 percent of primary school children in Nigeria are not meeting the expected levels of literacy and numeracy skills. Specifically, 65.7 percent of the students cannot read, while 51 percent lack basic arithmetic skill.

While several factors accounted for this dismal performance, inadequate finance is no doubt paramount. Between 2010 and 2014, the expenditure on education only accounted for 0.5 per cent of the national GDP and 8.8 percent of the federal government spending (Nwoko, 2015). This is grossly below both UNESCO’s recommendation of between 4 to 6 percent share of GDP and the Dakar Education for All EFA’s recommendation of 20 percent of national budget. Apparently, while all levels of education in Nigeria remain underfunded, basic education level remains more underfunded. While there is no specific estimate of the overall financing gap in Basic Education for Nigeria, the EFA Global Monitoring Report for 2014 shows that Nigeria needs to spend an additional US$1.6 billion annually on primary school teachers’ salaries alone to achieve Universal Primary Education by 20201. Data from Central Bank of Nigeria (CBN, 2015) shows that while general government expenditure (federal, state and local) on non-basic education increased by NGN194.7 billion between 2008 and 2012, universal basic education (UBE) funding increased by a modest NGN19.1 billion.

The deficiencies in financing are reflected in the persistent supply-side constraints in Nigeria‘s Education sector. In basic education, inadequate funding is evident in the number of OOSC and shortages in school infrastructure. Nigeria presently has the highest levels of OOSC (8.7 million) in the World (See Nwoko, 2015). Similarly, estimates on classroom/facilities at the primary and junior secondary level points to a shortfall of around 60 percent and 67 percent respectively (Digest of Education Statistics, Nigeria, 2010). Given these and other apparent challenges that constrain outcomes at the school level, it becomes imperative for policymakers to design strategies towards mobilizing more resources.

OPEC weekly basket price increased marginally from $45.09 on June 17, 2016 to $45.95 on June 24, 2016, while Nigerias bonny light increased from $47.61 to $48.90 (with a peak of $49.2 on June 23, 2016)within the same period. The rise in oil price, amidst downward pressures, was likely driven by expectations that the UK would remain in the EU. However, price fell (to $47.61) on June 24, 2016 following the outcome of the UK referendum (on June 23, 2016) to leave the EU. This was driven by concerns over a possible contagion effect of further disintegration on the EU (a major oil consumer) which could drive down oil demand in the longer term. In the medium term, oil prices could face further pressure as a result of rising crude oil output and attenuating production disruptions in Canada and Nigeria. Although, the recent rise in oil prices seem transient, Nigeria can benefit from the marginal rise if disruptions in oil production is quickly resolved

The Naira strengthened against the dollar in the review week. Specifically, the Naira appreciated by 2.7 percent to N355/$ (parallel market rate) on June 17, 2016, following the release of the flexible FOREX policy guidelines by the CBN on June 15, 2016. The new policy effectively adopts a single market structure hosted at the autonomous/inter-bank market. The inter-bank trading scheduled to commence on June 20, 2016 will be market-determined, officially eliminating the N197/$ peg. To ensure foreign exchange liquidity, primary market dealers have been introduced while the CBN will participate in the market through periodic interventions.

The All-Share index (ASI) and Market Capitalization both depreciated (week-on-week) by 1.45 percent for the second consecutive trading week- June 3, 2016 to June 10, 20166. ASI depreciated by 401.8 points from 27,634.42 points to 27,232.62 points, while Market Capitalization declined by N140billion from N9.49 trillion closing the week at N9.35 trillion. All other indices declined, with the exception of NSE ASem Index, NSE Insurance Index, and NSE oil/Gas Index. The delay in the implementation of proposed forex policy continues to adversely affect stock market performance. However, with growing speculations that the new FOREX guidelines would be released in the succeeding week, market indices could perform better subsequently. Hence, monetary authorities should ensure the timely release and implementation of the new FOREX policy to boost investors confidence in the near term and ensure price stability in the capital market.

Crude oil price continued to increase in the period under review, reaching its 2016 peak at $50.30 on June 2, 2016. Specifically, OPEC weekly basket price increased by 1.43 percent from $44.65 on May 27, 2016 to $45.29 on June 3, 2016. Brent was sold for $49.96 on June 3, 2016. The present rise in crude oil price can be attributed to oil production shocks in several oil-exporting countries, and the general expectation of a further cut in output following the OPEC meeting in Vienna on June 2, 2016. However, the OPEC meeting ended with no agreement on production quotas. In Nigeria, oil production level increased in the period under review, following repairs on some of the damaged oil and gas facilities. Precisely, Nigerias output increased by 200,000 barrels on June 3, 2016 to 1.6 million barrels.