The impact of higher fuel prices has begun to be reflected in the country’s overall inflation. Due to increased transportation costs, rising supply expenses and higher prices of both food and non food items, inflation climbed to its highest level in 16 months in May.
As a result, the cost of living for low income and middle income households has increased further, while income growth has remained significantly below the pace of inflation.
According to the latest data released by the Bangladesh Bureau of Statistics (BBS), point to point inflation stood at 9.42 percent in May. A month earlier, in April, the rate was 9.04 percent. This means inflation increased by 0.38 percentage points within a single month.
Inflation stood at 9.94 percent in January 2025. Since then, this is the highest rate recorded. Inflation has remained above 9 percent for the second consecutive month.
According to economists, the impact of the significant increase in fuel prices introduced in April is now becoming visible in the market.
On April 19, the government increased the price of diesel from Tk 100 to Tk 115 per litre, kerosene from Tk 112 to Tk 130, octane from Tk 120 to Tk 140 and petrol from Tk 116 to Tk 135. Prices were increased again on May 31. However, the impact of the second round of increases was not included in May’s inflation calculation.
Analysts say the impact of higher fuel prices extends far beyond the transportation sector. Production, storage, transportation and marketing costs for agricultural products also rise.
As a result, prices of rice, lentils, edible oil, fish, meat, vegetables and almost all essential commodities continue to increase. At the same time, the costs of clothing, education, healthcare and other services also rise. The May inflation data clearly reflects these developments.
According to BBS data, food inflation rose to 9.06 percent in May from 8.39 percent in April, an increase of 0.67 percentage points within a month. Meanwhile, non food inflation increased from 9.57 percent to 9.71 percent.
BBS data also show that the national average wage growth rate stood at 8.21 percent in May. This means wages increased at a slower pace than inflation. As a result, people are finding it more difficult to purchase goods and services. When wage growth or income growth remains below inflation, the financial hardship of ordinary people increases. Real income declines. If income fails to keep pace with inflation, families are often forced to borrow money or cut spending on food, clothing, transportation and other essential needs.
This upward trend in inflation has made daily life even more difficult for ordinary people. Real incomes are declining, forcing many households to reduce spending on food, healthcare and other necessities to manage household expenses.
Prices of several essential commodities have already risen significantly in markets across the capital.
Traders say transportation costs for trucks and goods have increased by several thousand taka since diesel prices were raised. The impact has spread from wholesale markets to retail outlets. Over the past few months, prices of various vegetables have increased by between 50 percent and 167 percent. Prices of eggs, edible oil and rice have also continued to rise. The price of a 12 kilogram LPG cylinder used for cooking has increased by nearly 43 percent over the past three months.
Meanwhile, electricity prices were increased last week. Economists fear this could create additional inflationary pressure in June, as the impact of higher electricity tariffs has not yet been reflected in May’s inflation figures.
S M Nazer Hossain, Vice President of the Consumers Association of Bangladesh (CAB), said that fuel price hikes, higher transport fares, instability in international markets and repeated increases in essential commodity prices by traders under various pretexts have made life extremely difficult for people with limited and marginal incomes. Any additional costs borne by businesses are ultimately passed on to consumers. Yet visible and effective government initiatives to control the market remain largely absent.
According to relevant experts, the continued impact of higher fuel and electricity prices is likely to affect markets in the coming months as well. Therefore, unless swift and effective measures are taken to control inflation, the cost of living for ordinary people will continue to rise and the pressure on low income and middle income groups will become even more severe.
