The government has set an ambitious target of bringing inflation down to 7.5 per cent in the 2026-27 fiscal year. But with inflation still at 9.16 per cent in June and wages trailing behind prices for more than four years, the goal remains a formidable challenge.
According to the latest figures released by the Bangladesh Bureau of Statistics (BBS), overall inflation stood at 9.16 per cent in June, remaining above the 9 per cent mark despite easing slightly from the previous month. Although the pace of price increases has slowed marginally, inflation continues to erode household incomes and strain the budgets of millions of families.
Food inflation fell to 8.60 per cent in June from 9.06 per cent in May, while non-food inflation eased to 9.61 per cent from 9.71 per cent. However, compared with a year earlier, prices remained significantly higher. Food inflation increased from 7.39 per cent in June 2025, while non-food inflation rose from 9.37 per cent over the same period.
Inflation also remained higher in rural areas than in urban centres, with rural inflation recorded at 9.23 per cent, compared with 9.01 per cent in urban areas.
At the current inflation rate, a product that cost Tk100 in June last year now costs about Tk109.16, highlighting the growing burden on consumers as the cost of everyday necessities continues to climb.
Wages continue to lag behind
Behind the headline inflation figures lies another persistent problem: wages have consistently failed to keep pace with rising prices.
The wage growth rate declined to 8.18 per cent in June from 8.21 per cent in May, remaining below the inflation rate for the 54th consecutive month since January 2022. As a result, workers' real incomes have continued to shrink, making it increasingly difficult for low- and middle-income households to cope with rising living costs despite nominal increases in earnings.
The widening gap between wages and inflation has steadily reduced households' spending capacity, forcing many families to cut back on essential goods and services.
Fuel prices add fresh pressure
Economists say recent increases in fuel prices have added fresh pressure to an already fragile inflation outlook.
The government raised fuel prices twice in April and May, followed by an increase in electricity tariffs in the final week of May. According to economists, higher fuel prices raise transportation and production costs, which are eventually passed on to consumers through higher retail prices.
The impact is already evident in local markets. Over the past two weeks, vegetable prices have increased by Tk10 to Tk15 per kilogram, while fish and meat have also become more expensive, although rice prices have remained comparatively stable.
Higher transport costs have increased the cost of moving goods across the country, adding further pressure to household budgets at a time when income growth continues to lag behind inflation.
A challenge years in the making
Inflation remained relatively stable until 2021, staying below 7 per cent for several years.
The situation changed rapidly after Russia's invasion of Ukraine in February 2022 triggered a sharp rise in global energy and commodity prices. Bangladesh, like many other countries, felt the impact through higher import costs and rising prices of essential goods.
The pressure intensified in August 2022 when domestic fuel prices were increased by more than 40 per cent. Inflation subsequently climbed above 9 per cent and has largely remained elevated since then.
The combined effect of global commodity shocks, higher domestic fuel prices and a weakening taka created sustained inflationary pressure that has persisted for more than four years. The shortage of US dollars further increased import costs, making essential commodities even more expensive in the domestic market.
Several economists have argued that policy responses under the previous Awami League government were insufficient, saying policymakers largely attributed inflation to global market conditions while stronger domestic measures to curb price pressures remained limited. They also contend that the inflation experienced by consumers was often higher than reflected in official statistics.
Government efforts and remaining challenges
After the interim government assumed office in August 2024, it introduced a series of measures aimed at containing inflation, including a contractionary monetary policy, higher policy interest rates and lower import duties on several essential commodities.
Those measures helped bring inflation down to around the mid-8 per cent range for a period. However, economists say the recent increases in fuel and electricity prices have once again pushed up transport, production and distribution costs, slowing progress in containing inflation.
As a result, overall inflation has remained above 9 per cent for the past three months despite continued government efforts.
Experts call for broader policy action
Distinguished Fellow at the Centre for Policy Dialogue (CPD), Khondaker Golam Moazzem argues that inflation cannot be controlled through monetary policy alone.
He recommends a broader policy response that includes encouraging private-sector employers to raise wages alongside public-sector salary adjustments, strengthening social safety net programmes while ensuring benefits reach genuine recipients, and tightening market monitoring to curb price manipulation and the influence of market syndicates.
According to him, controlling inflation will require coordinated action that protects both consumers and workers rather than relying solely on monetary tightening.
The human cost of inflation
For ordinary consumers, inflation is no longer just an economic indicator "it has become part of everyday life.
"My house rent has increased three times over the past three years, and prices of almost everything have gone up. Three or four years ago, I could save Tk4,000 to Tk5,000 every month. Now I cannot save anything. Instead, I often have to borrow money at the end of the month to run my family," said Zakir Hossain, a private-sector employee.
His experience mirrors that of millions of Bangladeshis struggling to cope with rising living costs. Whether the government can achieve its target of reducing inflation to 7.5 per cent will depend not only on easing price pressures but also on ensuring that wage growth keeps pace with the rising cost of living. Until then, inflation is likely to remain one of the country's most pressing economic challenges.
