Bangladesh’s households continue to face pressure on their living costs as wage growth falls behind inflation, despite a slight easing in overall price rises driven by cheaper rice and other food items.
Headline inflation edged down to 8.26 per cent in August from 8.32 per cent in July, but non-food inflation remained above 9 per cent, while wage growth slowed to 8.05 per cent, eroding the purchasing power of wage earners.
The findings were highlighted in the Economic Update & Outlook, September 2026, published on Monday by the General Economics Division (GED) of the Bangladesh Planning Commission.
According to the report, food inflation declined to 7.02 per cent in August from 7.16 per cent a month earlier.
Non-food inflation, however, increased to 9.32 per cent from 9.28 per cent, indicating persistent price pressures beyond the food market.
The GED said the marginal fall in headline inflation masked contrasting trends, with food prices easing while non-food costs continued to rise.
Rice prices offer relief
Falling rice prices played a major role in moderating food inflation. Overall rice inflation declined to -7.99 per cent in August from -6.00 per cent in July.
Inflation for medium rice fell to -5.58 per cent from -4.28 per cent, while fine rice inflation dropped to -6.71 per cent from -4.12 per cent. For coarse rice, the figure declined to -11.83 per cent from -10.19 per cent.
Rice’s negative contribution to food inflation consequently widened to -27.47 per cent from -20.25 per cent.
The GED said falling prices across all three rice categories suggested that the trend was broad-based.
However, it warned that sustained deflation could affect incentives for rice producers and required close monitoring.
Price movements in other food categories were mixed. Fish and dry fish accounted for 32.37 per cent of food inflation in August, up from 24.87 per cent in July.
Meat’s contribution declined to 13.51 per cent from 14.75 per cent, while that of fruits fell to 13.47 per cent from 17.50 per cent.
Vegetables’ contribution eased to 24.71 per cent from 25.68 per cent. Onion provided greater relief, with its negative contribution widening to -7.78 per cent from -3.21 per cent.
Wages lose ground to inflation
The pressure on household budgets intensified as wage growth slowed to 8.05 per cent in August from 8.22 per cent in July.
With inflation at 8.26 per cent, wage growth lagged behind by 0.21 percentage points, compared with a gap of 0.10 percentage points in July.
The GED said this reversed the improvement seen in July, when wage growth had moved closer to the inflation rate.
“As a result, wage-earning households continued to face pressure on their real purchasing power in August,” the report said.
The outlook for household finances will depend on whether food-price moderation continues and non-food inflation begins to ease, it added.
Transport-related costs also remained elevated. Transportation cost inflation rose to 9.41 per cent in August from 9.34 per cent in July, although transport services inflation declined to 18.24 per cent from 18.57 per cent.
Inflation in liquid fuels, octane, petrol and diesel remained unchanged, while LPG inflation edged down to 23.97 per cent from 24.03 per cent.
Development spending remains sluggish
The report also highlighted slow implementation of the Annual Development Programme (ADP) in the first two months of the 2026-27 fiscal year.
The implementation rate fell to 1.85 per cent from 2.39 per cent a year earlier, as expenditure on foreign-funded projects declined sharply.
Total ADP spending in July and August stood at Tk 5,709.70 crore, marginally below the Tk 5,714.83 crore recorded in the same period of the previous fiscal year.
In August alone, expenditure fell to Tk 3,588.52 crore from Tk 4,070.18 crore a year earlier, an 11.8 per cent decline. The monthly implementation rate dropped to 1.16 per cent from 1.71 per cent.
The GED said implementation could be accelerated through better project preparation, procurement, fund releases and execution at field level.
Economic indicators send mixed signals
Revenue collection remained below target despite year-on-year growth, while weak utilisation of external financing continued to constrain development spending.
Foreign exchange reserves recovered in August following a decline in July, supported by strong remittance inflows.
Imports of capital machinery also increased, potentially signalling improving investment activity. However, falling export earnings pointed to continued weakness in the external sector.
The GED further warned that the real appreciation of the taka could undermine Bangladesh’s price competitiveness in international markets, despite relatively limited changes in the nominal exchange rate.
Overall, the report points to continued economic strain, as easing food prices provide only limited relief while high non-food inflation, slower wage growth and sluggish development spending weigh on household welfare and economic activity.