Bangladesh is in the midst of an economic crisis as the prices of essential commodities skyrocket in 2024, exacerbating the financial pressure on millions of citizens. The inflation rate, which hit 9.92 percent in August 2023, has continued to rise, surpassing 10 percent in early 2024, according to the Bangladesh Bureau of Statistics (BBS). The rapid surge in the cost of food, fuel and basic necessities has left the country’s low- and middle-income populations struggling to survive as wages stagnate and household expenses soar.
Global and domestic drivers of inflation
The causes of this inflation crisis are both global and domestic. The Russia-Ukraine war, now in its second year, has continued to disrupt global supply chains, particularly in energy and food markets. As a result, Bangladesh’s import-dependent economy is facing increased costs for fuel and essential food items such as wheat and edible oil. The price of wheat, which the country imports in large quantities, rose by 30 percent globally by late 2023, causing flour prices in Bangladesh to jump from Tk 55 to over Tk 80 per kilogram in early 2024.
Fuel prices have also hit record highs, with petrol now costing Tk 135 per liter and diesel at Tk 118, a significant increase from 2022 levels. This rise in fuel costs has had a domino effect on the prices of transportation and goods, further pushing up inflation. The BBS reported that transportation costs increased by over 20 percent in early 2024, adding to the burden on businesses and consumers alike.
Domestically, the inflation crisis has been worsened by market inefficiencies, speculative trading, and weak government regulation. Traders and middlemen have been accused of hoarding essential commodities, driving prices up exaggeratedly. The Ministry of Commerce has reported that in 2024 alone, over 100 instances of price manipulation were uncovered, with some traders stockpiling cooking oil and rice to create artificial shortages.
Food inflation: A growing concern
Food inflation has been the most severe aspect of the crisis. According to the BBS, food inflation surged to 13.7 percent in January 2024, the highest rate in over a decade. The price of rice, a staple for most Bangladeshis, has risen by nearly 25 percent in just one year. Coarse rice now costs Tk 65 per kilogram, compared to Tk 52 in early 2023. The sharp rise in rice prices is particularly alarming, as Bangladesh’s domestic rice production was hit by climate-induced floods in 2023, reducing crop yields and leading to increased dependency on imports.
Cooking oil, another essential, has become unaffordable for many. In 2024, the price of soybean oil reached Tk 195 per liter, up from Tk 160 a year ago. This represents a 22 percent increase, forcing many families to reduce consumption or seek alternatives. The cost of vegetables, another dietary staple, has also skyrocketed. For instance, onions, which were Tk 60 per kilogram in 2023, now cost over Tk 90. Eggs, once considered an affordable source of protein, now cost Tk 180 per dozen, up from Tk 150 in 2023.
According to the BBS, food inflation surged to 13.7 percent
in January 2024, the highest rate in over a decade.
The price of rice, a staple for most Bangladeshis,
has risen by nearly 25 percent in just one year
The Bangladesh Institute of Development Studies (BIDS) has warned that if inflation continues unchecked, food insecurity will worsen for millions of people, particularly in rural areas where access to affordable food is already limited.
Impact on rural and urban populations
The inflation crisis is disproportionately affecting Bangladesh’s rural populations. Farmers, already grappling with rising costs of agricultural inputs, such as fertilizer and diesel, are now being forced to sell their produce at prices below market value due to middlemen’s control over the supply chain. The price of urea fertilizer, essential for crop cultivation, has doubled from Tk 22 per kilogram in 2022 to Tk 45 in 2024. As a result, rural farmers are caught in a cycle of rising production costs and diminishing returns.
In urban areas, the impact is equally harsh. The cost of living in cities like Dhaka and Chattogram has spiked, with rent, transportation, and food prices increasing simultaneously. A study conducted by the Centre for Policy Dialogue (CPD) in January 2024 found that urban households now spend 75 percent of their monthly income on food and basic utilities, compared to 60 percent in 2022. The middle class, in particular, is feeling the pinch as savings deplete and expenses continue to rise.
Government response and shortcomings
The government has implemented several measures to mitigate the impact of inflation, but these efforts have been insufficient. In early 2024, the government expanded its open market sales (OMS) program, increasing the daily distribution of subsidized rice and wheat from 3,500 metric tons to 5,000 metric tons. However, demand continues to far outstrip supply, with long lines forming at OMS distribution points across the country. The allocation of essential goods at subsidized prices has proven inadequate in meeting the needs of a growing number of people.
In response to rising fuel prices, the government announced a reduction in fuel taxes in January 2024, which led to a minor decrease in fuel prices. However, experts argue that this move only provides temporary relief and fails to address the root causes of inflation. The government’s reliance on importing food and fuel, combined with its failure to curb market manipulation, continues to drive up prices.
Long-term solutions: A roadmap
To address the ongoing inflation crisis, Bangladesh must implement both short- and long-term strategies. In the short term, stronger market monitoring and regulatory oversight are crucial to preventing price manipulation. The Ministry of Commerce has proposed increasing fines and penalties for hoarders and unscrupulous traders, but this will require more robust enforcement mechanisms.
In the long term, Bangladesh needs to reduce its dependency on imports for essential goods such as food and fuel. The government should focus on modernising the agricultural sector by investing in high-yield crops, improving irrigation infrastructure and providing farmers with affordable access to inputs. The 2024 national budget allocated Tk 25,000 crore for agriculture, a 12 percent increase from 2023, but experts say this amount is still insufficient given the sector’s challenges.
Bangladesh also needs to diversify its energy sources to reduce reliance on imported fuel. The government has already begun investing in renewable energy, with a target of generating 40 percent of electricity from renewables by 2041. However, progress in this area has been slow and more aggressive policies are needed to reduce the country’s vulnerability to global fuel price shocks.
The rising cost of commodities in 2024 poses a significant threat to Bangladesh’s economic stability and the well-being of its citizens. The government must act decisively to address both the immediate and underlying causes of inflation. Without swift and comprehensive action, millions of Bangladeshis will continue to suffer from food insecurity and financial hardship. While the situation is dire, there is still time to implement meaningful reforms that can stabilise the economy and provide relief to the most vulnerable populations.
Mohammad Rakib Hossain, a Lecturer at Journalism, Communication and Media studies in Varendra University, Rajshahi, can be reached at rakibrumcj@gmail.com
