Inflation continues to ease, but rice prices still a major concern: Planning Commission
Business Report :
Bangladesh has seen a steady decline in both headline and food inflation since December 2024, bringing the overall inflation rate closer to the government’s target of 7-8per cent set in the Monetary Policy Statement for January-June 2025.
Headline inflation represents the total inflation rate, encompassing all components of the Consumer Price Index (CPI), including food and energy.
The latest figures show headline inflation dropped to 8.48per cent in June 2025, falling below 9per cent for the first time since February 2023.
According to the Economic Update: July 2025 released on Sunday by the General Economics Division (GED) of the Planning Commission, food inflation also fell to 7.39per cent, the lowest since January 2023.
This disinflationary trend has been supported by a favorable supply environment, stable global commodity prices, prudent demand management, and a balanced exchange rate market.
The Bangladesh Bank has maintained a policy repo rate of 10per cent over the past six months, reinforcing its tight monetary stance. As a result, private sector credit growth remained modest-7.15per cent in May and 7.17per cent in June 2025.
On the global front, the FAO Cereal Price Index dropped to 107.4 points in June, its lowest since September 2020, during the Covid-19 pandemic.
Despite the overall decline in food inflation, rice prices remain stubbornly high, raising concern among both consumers and policymakers. According to the GED report, rice contributed 50per cent to food inflation in June, up from 40per cent in May.
Medium rice was the largest contributor, accounting for 25per cent, followed by coarse rice at 17.82per cent. Alarmingly, all three varieties-medium, fine, and coarse-registered a 15per cent year-on-year increase in June’s Consumer Price Index (CPI), continuing a 12-month trend of price hikes.
This price rigidity comes despite a robust Boro harvest, which traditionally helps stabilize rice prices in the domestic market. However, prices have shown no sign of correction. According to a USDA report from December 2024, the average price of coarse rice reached a decade-high in November 2024, indicating deeper structural price pressures in the rice market.
Several factors are contributing to the persistent surge in rice prices. First, the rising cost of inputs-including fertilizer, seeds, irrigation, and labor-has significantly increased production expenses for farmers, putting upward pressure on retail prices.
Second, post-harvest losses remain a major concern. The report estimates that up to 26per cent of harvested rice is lost due to inadequate storage facilities, inefficient processing systems, and poor handling practices.
Third, transportation costs have increased sharply, particularly affecting the movement of goods in remote or rural areas. These rising logistical expenses are being passed on to consumers, further inflating prices.
Finally, there is a growing tendency to hoard rice, driven by expectations of further price increases. This behaviour artificially tightens supply in the market, exacerbating the inflationary pressure on consumers.