Govt targets inflation at 7.5%

The government has set a target to contain inflation within 7.5 per cent in the upcoming 2026–27 fiscal year, following four consecutive years of elevated price levels, Finance Minister Amir Khasru Mahmud Chowdhury said while presenting the national budget in parliament on Thursday (June 11).

However, the budget speech offered limited new details on specific policy measures to achieve the target, focusing instead on broader monetary and fiscal coordination and control of money supply in the market.

The Finance Minister said Bangladesh’s import-dependent economy makes it vulnerable to exchange rate depreciation and external price shocks, both of which significantly contribute to inflationary pressure. Strengthening foreign exchange reserves, he added, remains a key policy priority.

“To contain inflation, coordinated monetary and fiscal policies will be pursued to manage liquidity in the market. At the same time, credit flow to the private sector will be ensured so that economic activity is not disrupted,” he said.

According to the latest Bangladesh Bureau of Statistics (BBS) data, inflation rose to a 16-month high of 9.42 per cent in May, indicating continued pressure on household budgets.

Despite multiple policy interventions over the past four years—including contractionary monetary policy, market monitoring drives and aggressive interest rate adjustments—inflation has remained persistently high. The policy rate has stayed at around 10 per cent for over a year and a half, compared to 5.50 per cent in September 2022.

Inflationary pressure initially surged during the COVID-19 pandemic and was further exacerbated by global disruptions following the Russia–Ukraine war. Some analysts have also pointed to domestic structural issues, including financial mismanagement and capital outflows, as contributing factors.

Even during the post-2024 political transition period, inflation remained above target levels despite repeated assurances from policymakers.

Official figures show that average inflation stood at 6.15 per cent in FY2021–22, rising to 9.02 per cent in FY2022–23, 9.73 per cent in FY2023–24, and 10.03 per cent in FY2024–25. For the current FY2025–26, the government had initially targeted a reduction to 6.5 per cent, but average inflation up to April remained at 8.59 per cent.