Govt’s Bank Borrowing Fuels Inflationary Pressure: CPD

Poverty in Bangladesh is worsening as inflation consistently outpaces wage growth, leaving millions unable to afford basic necessities. Over the past three years, food and living costs have surged, but incomes have stagnated, pushing almost three million more people into extreme poverty in 2025.

Despite persistent high inflation exceeding 9%, Bangladesh’s public food distribution under social protection schemes dropped by over 7% year-on-year in the first three quarters of FY2024-25, mainly due to political instability and disruptions in local governance. This reduction—from 25.34 lakh tonnes last year to 23.46 lakh tonnes—comes as rising prices continue to strain the poor.

Inflation in Bangladesh eased slightly in February but remained above 9% for the 24th consecutive month, with the Consumer Price Index (CPI) dropping to 9.32% from 9.94% in January, according to the Bangladesh Bureau of Statistics. This marks a reduction in food inflation, which fell to 9.24% from 10.72%, driven by increased supply of winter vegetables and certain spices.

The private sector in Bangladesh is under pressure due to persistent inflation (over 9% since March 2023), high borrowing costs, and energy shortages. Private investment has stagnated at 24% of GDP, while FDI has hit a six-year low.

Fitch Solutions forecasts Bangladesh’s inflation to average 8.5% in FY2024-25, exceeding Bangladesh Bank’s 7.0-8.0% target. Despite maintaining a 10% policy rate, inflation remains high due to political unrest and economic uncertainties.

Inflation in Bangladesh eased to 9.94% in January, down from 10.89% in December, marking the second consecutive monthly decline, according to BBS data. Food inflation dropped to 10.72% from 12.92%, driven by an abundant supply of winter vegetables.