Bangladesh’s inflation rate soared to a 12-year high of 11.66% in July, according to data released by the Bangladesh Bureau of Statistics on Monday. This marks a significant increase from June’s rate of 9.72%, driven primarily by a steep rise in food inflation, which hit a record 14.10%. Non-food inflation also rose to 9.68%, up from 9.15% in the previous month.
July’s inflation surge coincided with widespread protests demanding reforms to the government job quota system, which escalated into calls for the government’s resignation. The government’s crackdown on dissenters further fueled unrest, leading to curfews and internet shutdowns that disrupted supply chains and hampered business operations. The suspension of rail and port services during this period also contributed to economic disruptions.
The Mastercard Economic Institute (MEI) has forecasted a decline in both GDP growth and inflation for Bangladesh in the fiscal year 2025. MEI projects that GDP growth will drop to 5.7%, while inflation, after peaking at 9.8% in FY24, is expected to ease to 8% in FY25. Persistent high inflation has been eroding consumer purchasing power, adding to economic challenges exacerbated by weak domestic and external demand. The report also warned that higher US dollar rates could worsen vulnerabilities in Bangladesh’s external sector, suggesting a shift towards more market-based rates to address these issues.
