Rising inflation placed significant financial strain on individuals

The inflation crisis has plunged millions into financial hardship over the past year, as soaring food prices and stagnant incomes have left families struggling to afford basic necessities. Despite official assertions of inflation control, recent data paints a bleaker picture. Food inflation reached a staggering 14.10% in July 2024—the highest in 16 years—making 2024 one of the most financially challenging years for consumers.

Rafiqul Islam, a lower-middle-class resident of Dhaka, exemplifies these struggles. Just months ago, Tk1,000 covered his family’s weekly groceries. Now, it barely suffices for essentials like rice, lentils, and oil, excluding staples such as potatoes, onions, eggs, and meat, which have seen dramatic price increases.

In 2024, the average inflation rate rose to 10.27%, with food prices surging nearly 20%. Items like rice, oil, eggs, onions, garlic, and meat have become significantly more expensive compared to 2023. Official data from the Bangladesh Bureau of Statistics (BBS) and the Trading Corporation of Bangladesh (TCB) initially placed inflation below 10%. However, following the government’s fall, an interim administration disclosed that inflation had reached 11.66% by July.

Expert Insights on Inflation

Dr. Zahid Hussain, a former lead economist at the World Bank, remarked that the previous government’s efforts to curb inflation fell short. The interim administration, however, is taking encouraging steps that, if effectively implemented, could bring inflation down.

During the tenure of former Bangladesh Bank Governor Abdur Rauf Talukdar, economic challenges intensified, as special privileges to businesses worsened inflationary pressures. Experts point to the rise in non-performing loans during this period as a factor exacerbating economic instability.

The Cost of Living Soars

July saw food inflation hit 14.10%, the highest since the 2007-08 fiscal year, further straining household budgets. Stagnant income growth, combined with rising prices, has pushed many families into severe financial distress. Economists caution that without robust measures—such as enhanced market monitoring, addressing the dollar shortage, and implementing contractionary policies—the crisis will worsen.

Prices Outpace Earnings

Despite modest wage increases, persistent inflation continues to erode workers' purchasing power. For the past 34 months, wage growth has consistently lagged behind inflation. According to BBS data, inflation in November 2024 stood at 11.38%, while wage growth was just 8.10%. Inflation has remained above 9% for 19 consecutive months, peaking at 11.66% in July 2024, the highest in 13 years.

Government Efforts to Address Inflation

Planning Adviser Dr. Wahiduddin Mahmud acknowledged that controlling inflation is the country’s most pressing challenge. While reducing inflation is not easy, he emphasized that efforts are underway to stabilize prices. He cited high potato prices as an example, noting that if price stability is achieved, inflation could gradually ease.

Dr. Mahmud stressed the importance of focusing on effective policy implementation and economic reforms to address the ongoing crisis. Economists warn that failure to act decisively will exacerbate inflationary pressures, further compounding the financial burdens on ordinary citizens.