Bangladesh’s Inflation drops to 9.05pc in May

Business Report :

Bangladesh has witnessed a notable decline in overall inflation, with the rate dropping to its lowest point in over two years. According to data released by the Bangladesh Bureau of Statistics (BBS) on Monday, the country’s inflation rate in May stood at 9.05 percent, a significant improvement from the 9.89 percent recorded during the same period last year. This also marks a drop from 9.17 percent in April, indicating a continued downward trend.
The last time inflation was lower than this was in February 2023, when the rate stood at 8.87 percent. Since then, the country had struggled with persistently high inflation, particularly in the wake of global economic disruptions, supply chain constraints, and domestic political instability. The inflation rate had remained above 9 percent for much of the past two years, peaking at 11.66 percent in July 2024 during a time of mass protests and social unrest.
In recent months, however, inflationary pressures have shown signs of easing. The latest figures for May indicate mixed developments across food and non-food sectors and between rural and urban areas. Spending on food has slightly increased in urban regions, while it has declined in rural areas. This divergence in consumption patterns is reflected in the inflation rates. Urban food inflation rose modestly from 9.13 percent in April to 9.29 percent in May, suggesting a minor uptick in prices or increased demand. In contrast, rural food inflation declined to 8.30 percent in May from 8.40 percent a month earlier.
Non-food inflation has shown a consistent decline across both rural and urban areas. In rural regions, non-food inflation fell from 9.86 percent in April to 9.75 percent in May.
A similar downward trend was observed in urban areas, where the rate dropped from 9.88 percent to 9.63 percent over the same period. This broad-based decline in non-food inflation has played a crucial role in easing the overall inflation rate.
To contextualize these developments, it is important to consider the policy environment over the past year. The interim government, which assumed office following the ousting of the Awami League administration on August 5, 2024, in a mass student-led uprising, has made inflation control a top priority. Chief Advisor Muhammad Yunus, upon taking charge, introduced a series of measures aimed at stabilizing prices and restoring public confidence.
One of the key strategies adopted by the caretaker government has been tightening the money supply through repeated hikes in interest rates. By making borrowing more expensive, these measures were intended to cool down consumer demand and rein in inflation. Over the past five months, BBS data has shown a consistent decline in the inflation rate, suggesting that these policies may be taking effect, at least in the broader economic indicators.
Earlier this year, the inflation rate dropped to single-digit territory for the first time in months. It fell to 9.94 percent in January and further to 9.32 percent in February. Although there was a slight rebound in March, the rate dropped again in April and has continued to decrease through May. Food inflation specifically eased from 8.63 percent in April to 8.59 percent in May, showing marginal but steady improvement.
Despite these macroeconomic gains, many households have yet to feel relief, particularly in their daily expenditures on essential goods. Prices of staples such as rice, lentils, and cooking oil remain high in local markets, and public frustration over the cost of living continues. Analysts caution that while the headline inflation rate is decreasing, it may take more time for these improvements to translate into tangible benefits for the average consumer.
In summary, while the decline in inflation marks a positive development for Bangladesh’s economy, the mixed trends in food prices between rural and urban areas, along with ongoing challenges in essential goods markets, highlight the need for continued policy vigilance and targeted interventions.