Desk Report,
Vegetable prices ease, wage growth rate still low
The inflation rate has finally started to decline in the country. The situation that people had been holding back for so long is now getting some relief. Especially in the April-June quarter, the price of vegetables has come down, which has brought relief in food inflation.
Vegetable prices ease, wage growth rate still low
People have come to feel relieved as the food inflation rate has come down. Because a large part of the daily expenses of poor and low-income people go to buying food. But the problem is that people’s wages have not increased in line with inflation. As the inflation rate has come down, the gap between inflation and wage growth has narrowed, which has also brought relief to people’s lives.
In June, the country’s overall inflation rate decreased slightly to 8.48 percent, which is the lowest in the last 35 months. Earlier, the inflation rate was 7.48 percent in July 2022. According to the government agency Bangladesh Bureau of Statistics (BBS), food inflation was 7.39 percent in June. During this period, non-food inflation was 9.37 percent. Inflation in the country has decreased for four consecutive months, including June. Bangladesh Bank’s report titled ‘Inflation Dynamics in Bangladesh: April-June 2025’ (Inflation dynamics in Bangladesh: April-June 2025) shows that the average contribution of food products to overall inflation has decreased slightly in the fourth and last quarter of the outgoing 2024-25 fiscal year. The contribution of non-food and non-energy products has increased. The report shows that the average contribution of food and non-energy products to the country’s overall inflation in the April-June quarter was 49.7 percent; which was 45.7 percent in the previous quarter. The average contribution of food inflation has decreased during this period. It was 43.3 percent in the April-June quarter, which was 45.3 percent in the previous quarter. On the other hand, the average contribution of energy products to overall inflation in both the third and fourth quarters was 9 percent.
In the April-June quarter of the outgoing fiscal year, the reduction in vegetable prices played a special role in reducing food inflation. In this quarter, the contribution of vegetables to overall food inflation was only 4.1 percent, although in the previous (third) quarter, the contribution of vegetables was 14.1 percent. Cereal foods played the largest role in food inflation. In the fourth quarter, the contribution of cereal foods to food inflation was 43.7 percent, which is the highest in the last few quarters. The contribution of non-vegetarian foods was 33.9 percent. The reality is that although the role of non-vegetarian foods is significant, the role of non-vegetarian foods in food inflation decreased in the fourth quarter due to the decrease in non-vegetarian prices, the central bank’s report mentioned.
Among food products, the prices of golden chicken, medium-quality rice, soybean oil and lentils decreased in the middle of the fourth quarter but increased again towards the end. Especially in June, the price of golden chicken increased a lot. Although the price of golden chicken decreased by a record amount in April and May. Apart from this, the prices of potatoes, green chilies and onions were quite stable in this quarter.
In the case of non-food inflation, it can be seen that the prices of clothes and shoes played a major role in this. That is, the prices of these two products increased the most during this time. The role of these two products in non-food inflation was 17.8 percent. The role of energy was 14.6 percent. Apart from this, the role of health, education, communication and other products was stable.
In this regard, Salim Raihan, a professor in the Department of Economics at Dhaka University, told Prothom Alo, ‘The prices of vegetables have decreased in the market due to seasonal factors and proper supply. We have been saying for a long time that if the supply is proper, there is less scope for manipulation in the market. That may have happened to some extent. However, the rainy season has started. There is a possibility of flooding. As a result, policies must be determined by keeping these in mind and determining when and what crises may occur.’
Overall, Selim Raihan believes that some relief may have come; but there is no room for complacency yet. There must be policy coordination to make this trend sustainable.
Wage is a concern
The concern is that high inflation has prevailed in the country for more than three years. During this period, the rate of increase in people’s wages was consistently lower than inflation. Starting from April 2022, the inflation rate has consistently exceeded the rate of increase in wages. As a result, the purchasing power of consumers has decreased and real income has decreased. When inflation started to decline from February 2025, this gap has continued to narrow.
The gap between wage and inflation growth narrowed significantly in the fourth quarter of the 2024-25 fiscal year, April-June, especially in June. The main reason behind this decline in the gap was the decrease in the annual inflation rate. The average inflation rate in the fourth quarter was 8.9 percent. At the same time, the wage growth rate was relatively stable—an average of 8.2 percent.
As a result, household purchasing power is now increasing somewhat. Although there were occasional fluctuations due to the momentum effect (let’s say, inflation suddenly increases in March. If that excess inflation trend also has some impact in April, it is called the momentum effect), the pace of wage growth was relatively slow throughout the quarter. One of the reasons for this is that there was a high gap between inflation and wage growth for so long. That is, since this gap was high earlier, even if it decreased later, its impact is not seen much. It had an impact throughout the quarter.
According to the Bangladesh Bank report, there was an overall slight upward trend in wage growth in the fourth quarter of the 2024-25 fiscal year, although it decreased slightly towards the end of the quarter. In all sections of the country, there was a slight increase compared to the previous quarter.
