By Asif Showkat Kallol (Dhaka Bureau)
Bangladesh’s inflationary pressure remained elevated in the final quarter of fiscal year 2025-26 (April-June), with average headline inflation rising to 9.21%, up from around 8.8% in the previous quarter, driven mainly by higher fuel prices, rising vegetable costs and increased spending on transport and communication services.
According to Bangladesh Bank’s latest report, Inflation Dynamics in Bangladesh, the recent acceleration in inflation reflects mounting pressure from the energy sector, while persistent increases in food and service prices continue to keep overall inflation at a high level. The central bank warned that inflation could remain elevated in the coming months if global energy prices remain high and domestic fuel supply constraints persist.
The report, published on the central bank’s website recently, said effective policy measures and improved supply management would be essential to contain both fuel and core inflation.
Bangladesh Bank had raised its policy interest rate 11 times through October 2024, eventually taking it to 10% to curb inflation. However, at the 13th meeting of its Monetary Policy Committee held last Thursday, the central bank cut the policy rate by 50 basis points to 9.5% in an effort to boost investment and employment. Economists, however, warned that easier monetary conditions could increase liquidity in the market and create fresh inflationary pressure.
The report showed that core inflation accounted for the largest share of overall inflation during the April-June quarter, contributing 45.9%, up from 45.3% in the previous quarter. Food inflation’s contribution declined slightly to 42.3% from 43.8%, while fuel inflation’s contribution increased to 11.9% from 10.8%.
Within food inflation, vegetable prices emerged as one of the fastest-growing contributors, with their share rising to 37% from 22.7% three months earlier. Protein-rich foods- including fish, meat, eggs and milk- remained the largest contributor, accounting for 46% of food inflation. In contrast, Bangladesh Bank said rice and wheat prices had remained relatively stable, with their contribution turning negative at 8.9%, compared with a positive 8.1% in the previous quarter.
However, retail prices of coarse rice have increased despite little or no change in wholesale prices.
A visit to Karwan Bazar, Mohammadpur Krishi Market and several other markets in Dhaka on Sunday found that wholesale prices of coarse rice remained largely unchanged. Nevertheless, retailers raised prices by Tk 2-3 per kilogram, citing higher transport costs and weight losses of 2-3 kilograms when selling rice from 25-50 kg sacks.
A retailer on Salimullah Road in Kaptan bazar said coarse rice was selling at Tk 62 per kg, up from Tk 60 a week earlier. He said demand for coarse rice was relatively low in many neighbourhoods, prompting retailers to maintain higher profit margins.
Rickshaw puller Abdul Malek Mia said he had bought the same rice for Tk 60 per kg last week but had to pay Tk 62 this week. ’Even a Tk 2 increase per kilogram has a direct impact on low-income families like ours. We buy rice in small quantities because we cannot afford a full sack costing Tk 1,500-1, 600,’ he said.
Wholesale trader Sadeq Mia of Mohammadpur Krishi Market rejected retailers’ explanations, saying wholesale prices had not increased. While transport costs may add Tk 20-30 per sack, he argued that charging an extra Tk 2-3 per kg was unjustified and was creating artificial instability in the retail rice market.
Core inflation also rose to 8.4% from 8%, largely due to higher transport and communication costs. Internet and communication services alone contributed 22.3% of core inflation, the highest among all service categories.
Fuel inflation climbed to 17% from 14.9%, driven by higher prices of gas, lubricants and other petroleum products. Inflation in fuel and lubricants surged to 13.8% from 1.7%, while gas inflation rose to 24% from 11.3%. Inflation in solid fuels, including firewood and agricultural residues, also edged up to 21.8% from 21.5%.
The report noted that inflation is no longer driven solely by food prices. Rising costs of transport, communication, education, healthcare and other services are increasingly contributing to persistent price pressures across the economy.
The Asian Development Bank forecasts Bangladesh’s average inflation at 9% in FY2026 and 8.8% in FY2027, while the International Monetary Fund expects global food and energy prices to remain elevated through 2026. Bangladesh Bank concluded that monetary policy alone would not be sufficient to control inflation, stressing the need for stronger supply-side management and coordinated policy measures.
Asif Showkat Kallol: Works for the German-based online outlet The Mirror Asia as Head of News and is a Contributor at Pressenza-Dhaka Bureau.
