The Centre for Policy Dialogue (CPD) has cautioned that inflation in Bangladesh is likely to remain high in the 2025–26 fiscal year, surpassing government targets due to structural weaknesses and seasonal economic pressures.
At a media briefing titled “State of the Bangladesh Economy in FY2024–25”, held today at its Dhaka office, CPD Executive Director Dr. Fahmida Khatun noted that inflation has remained stubbornly high, particularly for food items.
“Inflation has been above 9 percent since April last year, with food inflation being especially severe,” she said, identifying fragile supply chains, rising import costs, and limited market competition as key contributing factors.
Dr. Khatun cited the sugar market as an example of market concentration, where five major importers dominate. “This high level of concentration indicates cartel-like behaviour, limiting competition and keeping prices artificially high,” she added.
The CPD highlighted that rural populations are disproportionately affected. With lower purchasing power and limited access to liquid assets, rural households are particularly vulnerable to the rising prices of essentials such as rice, edible oil, sugar, and meat—items that have seen steady price hikes since 2019 due to import disruptions and supply shocks.
Despite the Bangladesh Bank’s inflation target of 6 to 7 percent for FY2025–26, CPD’s analysis indicates that meeting this goal is unlikely. “Based on trends from 2012 to 2025, our models show that reducing inflation to 6.5 percent next fiscal year is improbable,” Dr. Khatun said.
While a temporary decline in inflation may occur in early 2026, she warned that seasonal factors—such as low agricultural output during the lean period and increased demand during Ramadan—could drive prices higher by mid-year.
To tackle inflation sustainably, CPD called for bold, coordinated policy action. This includes improved fiscal-monetary policy alignment, a more empowered competition commission, and enhanced market transparency.
“We must go beyond setting targets. Addressing supply-side weaknesses, increasing domestic production, stabilising the exchange rate, and curbing market monopolies are critical steps,” Dr. Khatun stressed.
Without urgent reforms, the think tank warned, high inflation will continue to erode real incomes and deepen economic hardship, especially for low- and fixed-income groups.
Call for Poll Date and Political Stability
The CPD also stressed the need for political stability to restore investor confidence and support economic recovery.
“It’s been nine months since the interim government took office. It’s time to declare a specific date for the national elections, whether in December or later,” Dr. Khatun said, responding to questions from reporters.
She underscored that without political stability, investment, employment, and economic growth would suffer. “Instability discourages economic players—both formal and informal sectors face reduced job opportunities. Poverty and inequality will only rise,” she added.
CPD Distinguished Fellow Professor Mustafizur Rahman echoed her concerns, noting that the investment climate will remain uncertain until elections are held.
However, he cautioned that holding elections alone will not immediately resolve the economy’s deeper challenges. “Persistent issues, such as the ongoing gas crisis, are hampering industrial growth and must be addressed in parallel,” he said.