TDS Desk:

Global food prices fell for a fifth consecutive month in January, according to the UN Food and Agriculture Organization (FAO). Domestically, record dollar inflows from remittances ensured ample foreign exchange to fund consumer goods imports, while favourable winter weather supported supply. Despite these ostensibly positive factors, inflation in Bangladesh rose again in January. The interim government’s term is therefore ending without having controlled prices for goods and services.

The Bangladesh Bureau of Statistics (BBS), which publishes monthly inflation data, released January’s figures yesterday. They showed inflation at 8.58 percent in the first month of the year, following increases in December and November. This marked a third straight month of rising inflation.

The sustained fall in global food prices should have lowered domestic costs. Instead, food inflation in Bangladesh rose for a fourth consecutive month to 8.29 percent in January. Non-food inflation was higher, at 8.81 percent. This contrasted sharply with the interim government’s stated goal of bringing overall inflation down to 6.5 percent.

Economists and market observers say controlling inflation was the public’s primary expectation of the interim government that formed after a mass uprising. Citizens had expected gains from the dismantling of syndicates entrenched during the Awami League’s 15-year rule. However, the 18-month tenure of the interim administration, led by Dr Muhammad Yunus, delivered no visible progress. Its term is ending, marked by a failure to rein in commodity prices.

Economist Dr Mustafa K Mujeri said policies and measures taken by the government and Bangladesh Bank to curb inflation had failed. “Steps taken by the central bank over several years — raising interest rates and adopting a contractionary monetary policy — have failed to contain inflation,” he told journalists. “Instead, we have seen the rate rise for three consecutive months. The interim government is ending its term with inflation still on an upward trajectory.”

He attributed the failure to flaws in the supply system, weak market management and related factors. “Like its predecessors, the interim government couldn’t rein in powerful mafia-like groups in the market. That’s why measures taken by the government and Bangladesh Bank haven’t produced positive results.”

Globally, however, most economies succeeded in curbing inflation over the past year. International Monetary Fund (IMF) data show global average inflation at 4.5 percent in 2025, down from 6.8 percent a year earlier. Data from international statistics provider Statista put the global average at 3.3 percent last year, compared with 5.76 percent in 2024. Research by US-based JP Morgan also shows global inflation fell by nearly 2 percent.

Closer to home, South Asian economies India, Pakistan and Sri Lanka made marked progress in controlling inflation last year. According to their respective central banks, inflation in neighbouring India fell to 0.71 percent in November and stayed near 1 percent in December despite a slight uptick. In Sri Lanka, inflation remained in negative territory for more than half the year and, despite edging up towards year-end, stood at 2.10 percent in December, according to the Central Bank of Sri Lanka. Pakistan, mired in economic crisis for several years, also recorded gains in 2025, with inflation falling to 5.6 percent in December.

According to BBS data, inflation began to surge after 2022. A dollar shortage triggered a devaluation of the taka, with the exchange rate jumping from BDT 84 to more than BDT 120 to the dollar in just two and a half years. This roughly 45 percent devaluation over a short period delivered a severe shock, pushing inflation to acute levels. In response, the central bank adopted a contractionary monetary policy from 2023. After the student-led mass uprising in August 2024, it raised the policy interest rate to 10 percent. Yet the tightening cycle failed to bring inflation meaningfully under control.

Disrupted supply chains during the July Uprising pushed overall inflation to a record 11.66 percent in July 2024. It then eased gradually, falling to a 39-month low of 8.17 percent in October 2025. The trend reversed in November, when inflation rose to 8.29 percent, before climbing to 8.49 percent in December and 8.58 percent in January this year. This persistence comes despite the dollar crisis largely easing, the balance of payments returning to surplus, foreign exchange reserves rising and the exchange rate stabilising.

Market observers say vegetable prices remained unusually high in January, as they had for much of the past year. Despite the onset of winter, prices did not fall materially in November, December or January. A sharp drop in prices at farmer level in late December failed to pass through to consumers. Prices also rose last year for most essentials, including rice, lentils, sugar, flour, fish, meat and LPG gas, preventing inflation from falling to expected levels.

Asked for comment, Aleya Akter, secretary of the Statistics and Informatics Division, told journalists: “For inflation or GDP, we only collect data and publish reports based on that data. Analysis is not our role; that’s for policymakers. For calculating inflation, data are collected from 154 markets nationwide.”

With power set to transfer to a government formed after the thirteenth parliamentary election on February 12, the interim government led by Dr Yunus will conclude its term. A review of inflation during its 18-month tenure shows it stood at 10.49 percent in August 2024, the month it took office, rising to 11.38 percent by November that year. The average inflation rate over the government’s first five months was 10.71 percent.

Inflation then began to ease in 2025, falling to 9.94 percent in January and reaching 8.49 percent by December. The lowest monthly rate in 2025 was 8.17 percent in October, with the annual average at 8.77 percent.

Commenting, Mustafizur Rahman, distinguished fellow at the private research institution Centre for Policy Dialogue (CPD), told journalists: “The interim government tried to reduce inflation with a contractionary monetary policy. Raising the policy rate to 10 percent and bank lending rates to 14-15 percent didn’t work. This shows the IMF’s policy prescription for controlling inflation has been ineffective. The interim government also failed to boost investment.”

He said the next elected government must adopt an alternative strategy to control inflation. “Whichever party comes to power will face the challenge of bringing inflation within reach,” Mustafizur Rahman said. “It must reconsider maintaining a contractionary monetary stance while devising other control measures. Focus should be on improving market management, increasing investment and ensuring timely release of imported and domestically produced goods from stocks.”

“Market monitoring and oversight must be strengthened,” he added. “Proper supervision is needed from the Competition Commission, the Directorate of National Consumer Rights Protection, the Ministry of Commerce and other relevant bodies so that produced and imported goods reach consumers. Syndicates can’t be allowed to operate in the market.”