Price pressures broaden across economy

Price pressures spread across a wider range of goods and services in Bangladesh in June this year, signalling that inflation became more broad-based even as price trends varied across different categories.

A larger share of items in the Consumer Price Index (CPI) basket recorded month-on-month price increases, indicating that inflationary pressures were affecting more products.

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Out of the 382 CPI items, 261 recorded price increases compared with the previous month, while 22 registered price declines and 99 remained unchanged, Bangladesh Bank said in its quarterly Inflation Dynamics in Bangladesh report for the fourth quarter (April-June) of fiscal year 2025-26.

Month-on-month headline and food inflation accelerated in June, although non-food inflation edged down slightly. The food diffusion index also increased, with 82 of the 126 food items posting price gains, suggesting that food price pressures became more widespread.

Meanwhile, steep hikes in gas tariffs and fuel and lubricant costs, along with solid fuel inflation, pushed energy inflation sharply higher in the last quarter of FY26, widening the gap between wage growth and consumer prices.

Out of the 382 CPI items, 261 recorded price increases compared with the previous month, while 22 registered price declines

ENERGY EMERGES AS BIGGEST DRIVER

Energy inflation remained elevated throughout the quarter, driven by strong positive momentum effects that reinforced upward pressure on energy prices, the report noted. The energy shock fed through to the CPI, lifting average headline inflation to 9.21 percent in Q4 from 8.8 percent in Q3 (January-March).

Energy inflation rose to 17 percent from 14.9 percent in the previous quarter, driven primarily by fuels and lubricants as well as a gas price hike.

Gas inflation surged to 24.0 percent year-on-year in Q4 from 11.3 percent in the previous quarter, while inflation for fuels and lubricants climbed to 13.8 percent from just 1.7 percent.

Solid fuels -- specifically firewood, agricultural by-products, cow dung and jute sticks -- remained the primary drivers of energy inflation, with their own inflation edging up to 21.8 percent from 21.5 percent.

This points to a “hidden” cost of living for households, particularly in rural areas, that rely on these traditional energy sources.

INFLATION OUTPACES WAGE GROWTH

Core inflation edged up to 8.4 percent in June from 8.0 percent a month earlier, driven in part by a surge in transportation and communication costs, particularly internet services.

Food inflation also rose to 8.7 percent, with vegetables emerging as the biggest contributor. Their share of overall food inflation jumped to 37 percent from 22.7 percent a month earlier.

However, protein-rich items -- including fish, meat and pulses -- remained the single largest driver, accounting for 46.0 percent of food inflation.

Retail and wholesale prices of most essential commodities increased during the quarter, with only a few exceptions. Farm-gate egg prices and marketing margins rose sharply in May, while energy-related price pressures continued to squeeze household budgets.

The wage-price gap widened in April-June compared with the previous quarter, although it narrowed marginally towards the end of the period, according to the Bangladesh Bank.

The central bank said the slight improvement stemmed mainly from a moderation in headline inflation rather than any meaningful acceleration in wage growth.

Wage growth stood at 8.2 percent in June, remaining below headline inflation of 9.2 percent. Among all divisions, Dhaka recorded the highest wage growth.

The Asian Development Bank’s July 2026 outlook, cited in the report, projected that Bangladesh’s headline inflation would remain high at 9 percent in FY26 amid elevated global energy prices linked to the Middle East conflict.

The central bank said maintaining policy vigilance remained imperative to anchor inflation expectations, mitigate persistent inflationary pressures and safeguard households’ purchasing power going forward.