By Dr Md Momtazur Rahman,
Bangladesh today stands at an uncomfortable position on South Asia’s economic map, having recorded the highest inflation rate in the region in recent years. The latest report by the United Nations Department of Economic and Social Affairs has only reinforced this reality. While average inflation in Bangladesh hovered close to 9 percent in 2025 and is projected to decline somewhat in 2026, it is still expected to remain the highest in South Asia. This outlook is deeply concerning because inflation is not merely a statistical figure—it is a silent but persistent pressure that directly affects people’s daily lives, steadily eroding the living standards of middle- and low-income households.
The impact of inflation is most visible in everyday markets. Bargaining, casual conversations with familiar shopkeepers, and the small joys of routine shopping have largely disappeared. Instead, people listen quietly to prices, pause for a moment, and often return home with fewer items than they intended to buy. This scene is no longer limited to the capital city; it is equally common in district towns and rural markets. Over the past three years, high inflation has ceased to be a temporary economic phase and has instead become a permanent feature of daily life in Bangladesh.
According to the latest data from the Bangladesh Bureau of Statistics (BBS), overall inflation stood at 8.49 percent in December, up from 8.29 percent in November. Although this increase may appear modest in numerical terms, its real-life consequences are significant. Inflation is not only about percentages; it is about whether households can manage their monthly expenses, whether they are forced to borrow by the end of the month, or whether the food on their children’s plates is shrinking.
Inflation is often discussed in technical language—monetary policy, foreign exchange reserves, dollar shortages, or import costs. Yet all these factors ultimately converge at one point: the consumer’s shopping bag. In today’s Bangladesh, inflation is not limited to rising prices of rice and lentils; it is deeply connected to exchange rate volatility, remittance flows, export performance, and broader economic stress.
Recent developments in the foreign exchange market deserve particular attention. The central bank has intervened by purchasing dollars through auctions, aiming to prevent excessive depreciation of the taka and stabilize the currency market. In January 2026 alone, billions of dollars were bought for this purpose. From a policy perspective, this represents a proactive and relatively bold approach compared to previous years. However, a critical question remains unanswered: are these interventions translating into relief at the consumer level? So far, most people feel little improvement in market prices. Even when the dollar rate appears temporarily stable, the prices of essential goods remain stubbornly high, raising doubts about how quickly—or whether—currency stability is feeding into lower consumer costs.
Amid this challenging picture, remittance inflows have emerged as a source of cautious optimism. In the first week of January alone, remittances crossed impressive levels, showing strong year-on-year growth. This inflow eases pressure on foreign exchange reserves and contributes to greater stability in the currency market, offering some breathing space for imports. Yet the key puzzle persists: if remittances are rising, why is inflation not easing?
To answer this, attention must turn to another crucial pillar of the economy—exports. While remittances have shown positive momentum, the export sector has been on a downward trajectory for several consecutive months. In December, exports fell by 14 percent, marking the sharpest decline in the past year and a half. This downturn is not confined to a single sector; the ready-made garment industry, Bangladesh’s export backbone, has also experienced multiple months of contraction. Exporters cite reduced orders due to higher tariffs and intense global competition, particularly in key markets such as the United States.
A decline in exports has consequences that extend far beyond reduced dollar earnings. Lower export income puts pressure on imports, raises the cost of raw materials and fuel, and ultimately increases production costs. These added costs are passed on to consumers, reinforcing inflationary pressure. In this way, weaknesses in the export sector make inflation more persistent and difficult to control.
Prolonged inflation also carries profound social consequences. Rising food prices contribute to malnutrition, especially among children, undermining both physical and cognitive development. Financial stress increases the risk of students dropping out of school, while families often delay medical treatment, creating long-term health risks. These costs rarely appear in budget speeches or official statistics, but they quietly accumulate within society, weakening its foundations.
In this context, the greatest challenge for policymakers lies in adopting coordinated and comprehensive measures. Controlling inflation cannot be achieved through monetary tools alone, such as dollar purchases or interest rate adjustments. Stronger market oversight, effective action against syndicates, improved supply chain management for agricultural products, and enhanced competition are all essential. At the same time, failure to diversify and strengthen the export base will leave the economy vulnerable to recurring shocks.
Remittances undoubtedly offer hope, but no economy can remain sustainable by relying solely on overseas income. Global labor market shifts can quickly disrupt remittance flows. Therefore, the long-term solution lies in strengthening three interconnected pillars: exports, domestic production, and employment. Only by reinforcing these foundations together can Bangladesh hope to contain inflation, protect living standards, and ensure inclusive and sustainable economic stability.
The writer is a professor of English and Registrar at IUBAT-International University of Business Agriculture and Technology, Dhaka. He can be reached at momtazur@iubat.edu.
