Although most economic indicators show improvement, rising rice prices continue to drive food inflation, according to a new report by the General Economics Division (GED) of the Bangladesh Planning Commission.
The country’s overall inflation reached 8.55% in July, slightly up from 8.48% in June. Food inflation rose to 7.56%, with rice alone contributing 51.55% of the increase, the GED report, “Economic Update and Outlook August 2025”, published on Sunday, revealed.
Economist M Masrur Reaz told TIMES of Bangladesh, “Rice prices have been rising for several years and there seems to be no way to bring them down. One of the main reasons could be errors in projections.”
Meaning, if the projected rice production is inaccurate and supply falls short of demand, price increases are inevitable. In this situation, the government can increase rice imports, added Reaz, also chairman of Policy Exchange, Bangladesh.
The government can also encourage the private sector to boost rice imports. In addition to this, the coverage of the Open Market Sale (OMS) programme can be expanded to benefit more low-income people.
The GED report noted that when the interim government led by Muhammad Yunus assumed office, the economy faced unbridled inflation, a reserve crisis, and institutional distrust. However, almost all economic indicators have now shown positive changes, signalling recovery.
Economic gains and structural reforms
For the first time in five years, the government recorded a $1 billion surplus in its current account in FY25, with an overall surplus of $3.3 billion. Exports increased nearly 25% year-on-year in July, while remittance inflows surged 29.5%.
The report highlighted ongoing structural reforms in the banking and revenue sectors. Bangladesh Bank has been given greater autonomy to address non-performing loans and weak oversight, while the National Board of Revenue (NBR) has been split into “Revenue Management” and “Revenue Policy.”
Trade negotiations with the United States reduced tariffs from 35% to 20%, opening new opportunities for Bangladeshi products. The government has also cleared most outstanding dues to foreign energy suppliers, stabilising energy supply.
Rice market remains unstable
Despite overall improvements in inflation, the rice market has remained volatile. Prices of three major rice varieties rose nearly 15% in July, contributing more than half of food inflation.
Floods, adverse weather affecting aus and aman rice production, and lower government distribution were cited as the main reasons. To address the situation, the government has initiated rice imports through the private sector.
Domestic activities and SDG progress
Digital transactions and e-commerce have surged, with e-commerce growing nearly 64% in a year. Agricultural lending and industrial production have stabilised.
Planning Adviser Wahiduddin Mahmud observed that institutional weaknesses and poor governance under the previous regime had hindered progress towards Sustainable Development Goals (SDGs). Democratic reforms and strengthened local government under the current administration are expected to restore momentum.
Challenges ahead
Despite progress, the report cautioned that youth unemployment, rural-urban inequality, multidimensional poverty, and climate change risks remain major challenges. The sustainability of reforms will depend largely on the political will of the next elected government.