Inflation continues to hit purchasing power

Inflationary pressures remained a key challenge for the Bangladesh economy, continuing to erode the purchasing power of low- and middle-income households, said the Bangladesh Bank (BB) in a report.

The central bank made the observation at a time when annual average inflation has been staying over 8.5 percent for four consecutive years.

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In its Bangladesh Bank Quarterly for January-March 2026, released yesterday, the BB said inflation on a point-to-point basis increased slightly to 8.71 percent in March 2026 from 8.49 percent in December 2025, driven mainly by higher consumer demand during Ramadan and Eid, as well as global supply disruptions linked to the Middle East conflicts.

Non-food inflation eased marginally to 9.09 percent in March 2026 from 9.13 percent in December 2025, while food inflation rose to 8.24 percent from 7.71 percent, reflecting higher prices for meat, fish, fruits, vegetables, and spices.

However, the Wage Rate Index (WRI) stayed below the level of the overall price increase, though WRI edged up slightly to 8.09 percent in March 2026 from 8.07 percent in December 2025, leaving real wages in negative territory and continuing to erode household purchasing power.

In the industry sector, the wage rate increased from 7.91 percent in December 2025 to 8.02 percent in March 2026. In contrast, the wage rate in the agriculture sector declined slightly to 8.11 percent in March 2026 from 8.16 percent in December 2025, largely due to the absence of major crop-harvesting activities during the period, said the report.

The service sector wage rate remained broadly unchanged.

However, headline inflation in the third quarter of the fiscal year remained above nominal wage growth, implying further erosion of purchasing power and continued negative real wage growth, it said.

The report said the BB and the government are maintaining close policy coordination to bring inflation to a comfortable level.

The government continued to expand targeted support through subsidised commodity sales by the Trading Corporation of Bangladesh (TCB), broaden the coverage of family cards and other social protection programmes, and pursue the rationalisation of non-essential public spending, it added.

“Bangladesh Bank is expected to maintain its tight monetary policy stance to anchor inflation expectations, contain demand-side pressures, and preserve macroeconomic stability.”

The BB said the January-March 2026 quarter presented a mixed picture. “The real sector faces near-term headwinds from broad-based sectoral moderation and persistent inflation, while the external position shows relative resilience,” it said.

The central bank said the economic outlook remains cautiously optimistic, bolstered by ongoing structural reforms, greater policy flexibility, and an easing of global energy markets.

“Measures to revitalise distressed industries, reopen closed factories, and expand access to bank financing through targeted credit stimulus packages are expected to support job creation and stronger economic development over the medium term,” it added.

The BB, based on an analysis, suggested that a temporary increase in credit growth by means of credit stimulus can support output growth while keeping inflation and interest rates at low levels within the forecast horizon.