Inflation in Bangladesh showed signs of easing in April 2025, driven by the combined effects of tight monetary policy and targeted fiscal interventions, according to the Economic Update and Outlook: May 2025 released by the General Economics Division (GED) of the Planning Commission.
The report, published on 24 May, indicated that the general inflation rate stood at 9.17% in April, while food inflation came down to 8.63%, reflecting a slight but important decline compared to earlier months. The easing of inflation is being seen as a key indicator that the government’s efforts to manage rising prices are beginning to yield tangible results.
The GED attributed the decline to a mix of demand-side and supply-side measures. On the demand side, the Bangladesh Bank’s tighter monetary stance—including higher policy rates and liquidity management—has contributed to dampening excess demand in the economy. On the supply side, government initiatives such as tariff cuts on essential commodities, especially rice and edible oil, played a crucial role in easing consumer pressure and improving food affordability.
Rice remained the biggest driver of food inflation, accounting for nearly 40% of the food inflation basket, underscoring its central role in household consumption and inflation dynamics. Despite the policy interventions, rice prices have remained elevated due to a mix of domestic supply chain disruptions and higher global prices, although the recent duty reductions have begun to mitigate this trend.
Interestingly, potato prices fell significantly in April, which helped bring down the overall food inflation index. According to the report, potato prices had a –13.6% impact on the food inflation rate, acting as a counterbalance to the inflationary effect of other staples.
The report also highlighted regional disparities in inflation, noting that rural food inflation remains higher than in urban areas. This suggests that rural households continue to face greater challenges in accessing affordable food, possibly due to higher transportation costs, limited market access, and localized supply shortages.
Although inflation remains above the government’s comfort zone, the Planning Commission considers the April data a positive signal. The report stated that the observed easing reflects the initial success of macroeconomic stabilization policies and signals the potential for further moderation if current measures are sustained and refined.
To support further inflation control, the GED recommended strengthening strategic food reserves, particularly for essential items like rice, lentils, and edible oil. This would enable the government to respond more effectively to supply shocks, whether domestic or global, and help stabilize prices during volatile periods.
The report also called for continued coordination between monetary and fiscal authorities, emphasizing the importance of policy alignment in managing inflation without undermining economic growth. It advised maintaining fiscal discipline, avoiding excessive subsidy expansion, and ensuring effective implementation of budgetary allocations for food security and rural development.
This report comes at a critical juncture, as the government prepares its upcoming national budget and weighs its economic priorities. Inflation management is expected to be a central theme in the budget discussions, given its broad impact on household welfare, investment sentiment, and overall economic stability.
While risks remain—particularly from global commodity markets, exchange rate volatility, and weather-related disruptions—the April figures offer cautious optimism that Bangladesh’s economy may be entering a phase of gradual price stabilization.
