Food inflation falls, overall woe persists in March
Bangladesh’s economy showed mixed signals in March, as easing food prices offered some relief while persistently high non-food inflation and fiscal pressures continued to weigh on the overall outlook, according to a report by the General Economics Division (GED).
In its Economic Update and Outlook (April 2026), the GED said overall inflation declined to 8.71 percent
in March from 9.13 percent in February, largely due to a drop in food inflation to 8.24 percent.
A strong Boro harvest helped drive the decline, with rice prices playing a key role. Rice inflation turned negative at -2.20 percent, supported by increased supply, higher imports, and government open-market sales.
However, the relief was partly offset by rising prices of other food items, particularly meat, which saw inflation of 15.11 percent, along with continued increases in fish and vegetables.
In contrast, non-food inflation remained “sticky” at 9.09 percent. Analysts attribute this to higher energy costs and currency depreciation, which have pushed up expenses related to housing, transport, and utilities.
Despite a slight narrowing of the gap between inflation (8.71 percent) and wage growth (8.09 percent), households continue to face pressure as real incomes decline, with living costs rising faster than earnings.
The banking sector showed some resilience, with total deposits rising 11.28 percent year-on-year to Tk19,95,461.3 crore in February. However, public sector borrowing grew sharply by 29.61 percent, indicating increased government reliance on bank financing.
Revenue collection remains a concern. In March, the National Board of Revenue (NBR) collected Tk33,521 crore, missing its revised target by Tk19,769 crore—a shortfall of 37.10 percent. VAT recorded the largest gap among revenue sources.
Development spending also slowed, with implementation of the Annual Development Programme (ADP) declining. Total expenditure during July–March stood at Tk75,607 crore, down from Tk82,894 crore in the same period a year earlier.
The drop was particularly evident in foreign-funded projects, suggesting delays in procedures or tighter conditions from development partners.
Remittance inflows provided some support, rising to $3.76 billion in March from $3.30 billion a year earlier, helping stabilise foreign exchange reserves at $34.12 billion.
However, exports showed signs of weakness. Year-on-year export growth fell sharply to -18.07 percent in March, with ready-made garment shipments declining significantly. Higher global energy prices and domestic fuel costs are affecting competitiveness.
The exchange rate remained relatively stable, with the taka at 122.62 per US dollar. However, the Real Effective Exchange Rate (REER) rose to 126.03, indicating a real depreciation that may support exports but increase import costs.
Overall, the easing of inflation appears fragile, with the economy relying heavily on the Boro harvest and remittance inflows. Ongoing global uncertainties and domestic fiscal pressures continue to pose challenges for the months ahead.
