High Inflation Drives 79 Lakh Bangladeshis into Poverty

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.

Bangladesh’s per capita income declined by $46 to $2,738 in FY 2023-24, marking the third consecutive year of decline, according to Bangladesh Bureau of Statistics (BBS). The highest recorded per capita income was $2,793 in 2021-22, which dropped to $2,749 in 2022-23.

Real wage growth in Bangladesh has remained negative for 36 consecutive months as inflation consistently outpaces wage increases, forcing low-income households to cut back on food consumption. In January 2024, wage growth stood at 8.16%, 1.78 percentage points below the 9.94% inflation rate, according to BBS data.

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.

In 2024, severe droughts, floods, and cyclones disrupted agriculture in Bangladesh, damaging crops and increasing costs for fertilisers, seeds, and irrigation by 10-50%. Rising production costs, coupled with a surging dollar exchange rate (Tk 110 to Tk 129), drove food inflation above 13.8%, straining both farmers and consumers.