Wage growth in Bangladesh has failed to keep pace with inflation for four and a half consecutive years. Since January 2022, wages have risen at a slower rate than consumer prices every month, eroding real incomes and weakening the purchasing power of households, particularly those of limited incomes.
Persistently high inflation has made it increasingly difficult for low-income and middle-class families to make ends meet. With about 86 per cent of the country’s economic activity taking place in the informal sector, workers are especially vulnerable when wage growth lags behind inflation.
Inflation has remained above 9 per cent for three straight months. The Bangladesh Bureau of Statistics (BBS) on Monday released its latest monthly inflation data, showing that inflation eased to 9.16 per cent in June from 9.42 per cent in May, the highest level in the previous 16 months since February 2025.
Against this backdrop, around 1.5 million government employees will begin receiving higher basic salaries under a new pay scale from July. Economists warn that the salary increase could fuel another round of price hikes, putting further pressure on inflation and squeezing the purchasing power of people outside the public sector.
Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), told Prothom Alo that inflation was unlikely to decline significantly in the near term. On top of that, government employees are getting a pay raise, which will have an impact on the market, he said.
Prolonged high inflation has made life unbearable for people on limited incomes. Their real incomes have fallen sharply, reducing their spending capacity. As households cut back on expenses, they are spending less on recreation, tourism and other sectors, which is also hurting business activity.
Real incomes continue to decline
From January 2022 through June this year, wage growth has failed to match inflation every month.
According to BBS data, inflation stood at 5.86 per cent in January 2022, while the national wage growth rate was 5.92 per cent. Since then, wage growth has not exceeded inflation in any month, meaning real incomes have declined for 53 consecutive months.
In June, inflation was 9.16 per cent, while the national wage growth rate stood at 8.18 per cent. Before 2022, however, wage growth exceeded inflation in most months.
The BBS calculates the national wage index using wage data from 63 occupations across all 64 districts, covering sectors including agriculture, fisheries, livestock, construction, manufacturing and transport.
According to the BBS, about 86 per cent of Bangladesh’s economic activity takes place in the informal sector, employing more than 50 million people. When wages fail to keep pace with inflation, these workers experience a steady erosion of their real purchasing power.
Economists often describe inflation as a form of hidden tax. If households already spend all of their income on daily necessities, rising prices without corresponding income growth force them either to borrow money or cut spending on food, clothing, transport and other essentials.
Zakir Hossain, who works for a private real estate company and lives with his family in Dhaka’s Kawla area, said his salary remained unchanged in 2024 and 2025. It increased by Tk 5,000 this year to Tk 45,000 a month.
“My house rent has increased three times over the past three years, and the prices of essential goods have also gone up,” he told Prothom Alo. “Three or four years ago I could save Tk 4,000 to Tk 5,000 a month. Now I can’t save anything. Instead, I struggle to make ends meet at the end of the month and sometimes have to borrow.”
Like Zakir, countless low-income and middle-class families have struggled to cope with rising living costs over the past two to three years.
Limited progress in controlling inflation
Inflation remained broadly under control—below 7 per cent—until 2021. The situation changed rapidly after the outbreak of the war in Ukraine in February 2022, which pushed up global commodity prices and, in turn, domestic prices.
In August that year, Bangladesh raised fuel prices by more than 40 per cent, sending inflation from around 7 per cent to above 9.5 per cent. Since then, inflation has remained persistently high.
Economists say the then Awami League government took few decisive steps to contain inflation, with policymakers attributing the price surge largely to global factors.
The sharp depreciation of the taka against the US dollar in 2022, coupled with dwindling foreign exchange reserves, drove up import costs and further increased domestic prices.
Critics argued that while official inflation figures ranged between 7 per cent and 8 per cent, actual inflation was significantly higher.
After the Awami League government was ousted in the mass uprising on 5 August 2024, the interim government took office.
According to data released afterward, inflation stood at nearly 12 per cent in July that year, while food inflation exceeded 14 per cent—the highest level in 13 years.
The interim government subsequently introduced a series of measures, including a contractionary monetary policy, higher interest rates and lower import duties on some essential commodities.
As a result, inflation eased to around 8.5 per cent. However, it began to edge up again toward the end of the interim administration. Since the new government took office, inflation has remained above 9 per cent for three consecutive months.
3 recommendations to curb inflation
CPD research director Khandaker Golam Moazzem offered three recommendations to help bring inflation under control.
First, he said, higher salaries for government employees are likely to push up the prices of essential goods as well as rents and transport costs, putting additional pressure on people outside the public sector. The government should therefore encourage higher wages and salaries in the private sector.
Second, he said social protection programmes and various card-based assistance schemes should be maintained, with safeguards to ensure that benefits reach the intended recipients.
Third, he called for stronger oversight of the overall market, including efforts to curb the influence of market syndicates.
