Despite a slight decline in overall inflation in recent months, Bangladesh continues to grapple with stubbornly high inflation driven by rising costs in non-food services and imported goods. While food prices, especially for perishables like vegetables, have shown a degree of stability, inflation has remained above 9 percent due to mounting pressure from other sectors. A recent Bangladesh Bank report on inflation dynamics reveals that import-dependent non-food products and services are now playing a larger role in driving the country’s cost-of-living crisis.
Food Prices Fall, But Overall Inflation Persists: According to the Bangladesh Bank’s analysis for the third quarter (January-March) of the 2024-25 fiscal year, overall inflation eased to 9.5 percent, compared to peaks earlier in the fiscal year. This marginal improvement was primarily due to seasonal supply boosts of vegetables and government interventions that included reduced import duties on essentials like onions, edible oil, and spices ahead of Ramadan. These factors helped keep food inflation in check temporarily.
The report showed that prices of perishable items such as vegetables, eggs, fish, and raw meat remained stable from December 2024 to March 2025. The prices of essential goods like flour, pulses, sugar, and edible oil even registered a slight decline over the same period. Moreover, the availability of winter crops during these months helped bring down the prices of several key food items, giving consumers a brief reprieve.
However, despite the easing in food inflation, the overall inflation rate remains above desired levels. Analysts say this is because the costs of non-food goods and services have surged in the past few months, negating the relief seen in the food sector.
Non-Food Inflation: The Silent Burden: The Bangladesh Bank report highlights that the impact of imported, non-food goods on inflation has grown significantly. Products like diesel, gas, mobile phones, electronics, and other consumer durables-all of which rely heavily on imports-have seen price hikes, driven by global market volatility, taka depreciation, and rising import costs.
Non-food services such as housing, healthcare, transportation, and education have also seen sharp cost increases. The report notes that these service sectors are now contributing more heavily to inflation than they were even a few months ago.
Economists warn that this trend is more worrisome than temporary fluctuations in food prices. “Once prices rise in service sectors, they are very sticky. They don’t come down easily,” said Dr. Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD). “This kind of inflation creates persistent pressure on household budgets and reduces the quality of life in a more structural way.”
The rise in service costs also reflects broader structural inefficiencies. Urban housing rents have gone up due to rising construction material prices and property taxes. Medical expenses are increasing as hospitals adjust their fees in response to higher operational costs, while private schools have hiked tuition fees across the board.
Fuel Price Dynamics Shift: Interestingly, fuel, which was a major contributor to non-food inflation throughout 2022 and early 2023, has played a diminishing role in recent months. According to the Bangladesh Bank report, fuel contributed 26 percent to non-food inflation in March 2024. This dropped dramatically to just 1 percent in March 2025, mainly due to falling global oil prices and adjustments in domestic fuel tariffs.
However, other import-dependent goods have filled the vacuum left by fuel, keeping the pressure on overall inflation intact. As a result, while non-food inflation has evolved in terms of composition, it has not declined meaningfully in terms of impact.
Food Items Still Vulnerable: While vegetables and a few imported spices saw lower prices during the winter season, some food items like fish, meat, and eggs continued to climb in price. The Bangladesh Bank report identified protein-rich food items as the largest contributors to food inflation. These high-protein goods are essential for nutritional balance and are consumed widely across all income groups, making their inflationary effects more severe.
Edible oil prices, which had remained relatively stable for much of 2024, have also started to climb again since December, raising concerns that food inflation could again rise in the coming months.
ADB, IMF Project High Inflation to Persist: International financial institutions have painted a similarly cautious picture for the inflation outlook in Bangladesh. The Asian Development Bank (ADB) in its April edition of the Asian Development Outlook projected an average inflation rate of about 10 percent for the current fiscal year. While a slight decline is expected by year-end, the rate is likely to remain well above the central bank’s comfort zone.
The ADB attributes this to global commodity prices, supply chain disruptions, and currency volatility, although it notes that tight monetary policy and favorable weather could help reduce inflation in the next fiscal year.
The International Monetary Fund (IMF), in its April World Economic Outlook, echoed this sentiment, projecting current-year inflation to hover around 10 percent. The Fund expects inflation to come down to about 5 percent in the medium term-conditional upon continued monetary tightening, macroeconomic stability, and effective fiscal measures.
Wages Lag Behind Inflation: One of the most pressing concerns flagged by both the central bank and independent economists is the widening gap between wage growth and inflation. Since April 2022, inflation in Bangladesh has consistently outpaced wage increases, eroding real incomes and weakening purchasing power. This has been especially hard on low- and middle-income households, which spend a higher portion of their income on necessities.
“In nominal terms, wages may have gone up in certain sectors, but when you factor in inflation, people are actually earning less in real terms,” said Dr. Selim Raihan, Executive Director of SANEM. “This gap between income and expenditure is making it harder for families to afford basic needs, let alone save or invest.”
The Long-Term Challenge: While recent inflation data offers a glimmer of hope, the Bangladesh Bank report warns against complacency. Non-food inflation, especially in service sectors, remains sticky and continues to exert upward pressure on the general price level. Moreover, the country’s heavy reliance on imports-ranging from consumer goods to raw materials-makes its inflation trajectory highly sensitive to external shocks and currency movements. Policymakers are now faced with the challenge of balancing immediate relief measures with long-term reforms. Subsidies, duty cuts, and monetary tightening can offer short-term relief, but unless structural issues in the service and import sectors are addressed, inflation is likely to persist.
Bangladesh’s inflation may have receded slightly, but the underlying trends suggest that the battle is far from over. The recent Bangladesh Bank report underscores a shift in the drivers of inflation-from food to non-food and service sectors-indicating a more entrenched and complex inflationary environment.
Unless comprehensive measures are taken to control the rising costs in healthcare, housing, education, and import-reliant consumer goods, the economic burden on ordinary citizens will continue to grow. With wage growth still lagging and global uncertainties looming, the government faces a steep uphill battle in its efforts to bring inflation down to sustainable levels.
