Despite a nearly 40 per cent fall in global rice prices over the past year, domestic rice prices in Bangladesh have remained elevated, as high production costs continued to exert upward pressure, limiting the pass-through of global price relief to consumers, a Centre for Policy Dialogue (CPD) study revealed on Saturday.
As a result, food inflation followed a mixed trajectory in 2025, declining steadily from June to October before reversing in the final quarter, reflecting persistent pressure from rice prices and structural weaknesses in the food supply chain, the report said.
CPD released its assessment report titled "State of the Bangladesh Economy in FY2025-26 (First Reading)" under its Independent Review of Bangladesh's Development (IRBD) programme, held at CPD's city office. Its Executive Director, Fahmida Khatun, presented the report.
According to the study, from June to November 2025, prices showed an overall downward trend, although marginal fluctuations persisted, indicating partial easing rather than a sustained correction.
This fragile stabilisation became evident in December 2025, when headline inflation rose to 8.49 per cent from 8.29 per cent in November, signalling renewed inflationary pressure.
Food inflation has been on the rise since October 2025, driven mainly by higher prices of essential commodities such as rice, flour, edible oil, lentils, and onions.
The situation was further aggravated by monsoon-induced crop damage affecting around 2,500 hectares, creating supply-side shocks and intensifying volatility in food prices.
At the same time, non-food inflation remained sticky, staying above nine per cent throughout 2024-25, reflecting weak transmission of monetary policy measures and persistent cost-push pressures across the economy.
The CPD study was based on 10 commodities, including rice, oil, lentils, sugar, chicken, and others.
Rice continued to be the single most important contributor to food inflation. Despite a sharp fall in global rice prices-estimated at around 40 per cent during the review period-domestic rice prices did not decline proportionately.
Instead, they remained stubbornly high, fluctuating within a narrow band and even rising slightly towards the end of the year.
The study attributes this rigidity primarily to high production costs, including increased prices of fertiliser, diesel, irrigation, labour wages, and transport. Farmers and millers faced elevated cost structures, limiting their ability to reduce prices even when global market signals softened.
CPD also noted that higher financing costs and working capital constraints for millers played a role in keeping rice prices firm.
From October to December 2025, food inflation began to rise once again. Apart from rice, seasonal supply disruptions, higher logistics costs, and market concentration at the wholesale and milling levels contributed to renewed price pressures.
The CPD team interviewed retailers, traders, and consumers. Retailers pointed out that variations in market prices stem from a combination of structural and operational factors within the supply chain.
These include limited bargaining power, frequent fluctuations in demand and supply, the dominant role of intermediaries, and instances of supply manipulation that create artificial demand.
High transportation costs, differences in product quality, and market syndication also contribute to price disparities across markets.
The survey further revealed that more than half of retailers incur additional fees or commissions beyond the purchase price when sourcing commodities for retail sale.
Such extra payments are reported for most food items, with notable exceptions including green chilli, eggs, and chicken. These additional costs increase the overall procurement price and are often passed on to consumers, thereby exerting upward pressure on retail food prices.
According to retailers, these fees are primarily paid to wholesalers or urban aratdars (commission agent traders), who act as intermediaries facilitating transactions between beparis (another category of intermediary traders) and retailers.
While some respondents were unable to clearly explain the basis for these charges, others acknowledged that the commissions function as a key source of income for intermediaries, highlighting the entrenched role of middlemen in shaping price outcomes.
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