Intractable inflation in Bangladesh shows signs of easing a little as the July rate cooled down to 8.32 per cent by official count, on somewhat consumer product-supply improvements.
According to latest BBS data, the headline inflation in the country eased by 0.23-percentage points to 8.32 per cent last month as both food and non-food prices rose at a slower pace.
The rate was the lowest since August 2025, when inflation stood at 8.29 per cent.
The moderation in July was also reflected in the 12-month moving average, which declined marginally to 8.66 per cent from 8.68 per cent in June.
The moving average provides a smoother measure of the inflation trend by reducing the impact of month-to-month volatility.
Despite the downturn, inflation remained 0.82-percentage points above the government's annual target of 7.5 per cent, signifying the continuing pressure on household purchasing power.
The easing in the official inflation measure, however, appeared at odds with reports of sharp increases in prices of some food items in markets.
Economists and people familiar with the inflation data, however, say changes in prices of individual products do not necessarily translate proportionately into the overall consumer price index because products carry different weights in the CPI basket.
For example, rice varieties consumed by a large section of the population carry a substantially higher weight than aromatic rice. A sharp increase in the price of a lower-weight product, therefore, has a relatively limited effect on headline inflation.
Food inflation eased to 8.29 per cent in July, while non-food inflation declined to 9.28 per cent, according to Bangladesh Bureau of Statistics or BBS.
Inflation also moderated in both rural and urban areas.
In rural areas, food inflation fell to 7.14 per cent, down 0.22-percentage points from a year earlier, while non-food inflation stood at 9.53 per cent, 0.20-percentage points lower than in July 2025.
In urban areas, food inflation stood at 7.21 per cent, down 0.43-percentage points from a year earlier. Non-food inflation was 8.90 per cent, 0.35-percentage points lower than in the same month last year.
Rate cut clouds inflation outlook.
Economists caution that inflation could pick up in August after the Bangladesh Bank cut its policy rate by 50 basis points, potentially weakening the monetary restraint that had helped contain price pressures.
They have also pointed to increases in the prices of several food items towards the end of July and early August, which could put additional pressure on lower-income households.
Dr. Md Ezazul Islam, director-general of Bangladesh Institute of Bank Management (BIBM), told the FE that downward trend of inflation reflected, in part, the benefits of maintaining a high policy rate.
"We have got the benefit of keeping the high policy rate.
He said Bangladesh Bank lowered the policy rate on August 02 and said it would be necessary to wait for the August inflation data to determine whether the rate cut would contribute to renewed price pressures.
On rising vegetable and rice prices, Dr Islam said the price of aromatic rice increased by more than 100 per cent. But the increase would have only a limited impact on headline inflation because aromatic rice has a relatively low weight in the CPI basket.
How BBS measures inflation: The statistical bureau collects price data from 154 markets across the country, including 90 urban markets and 64 rural markets, within the 18th day of the month.
The urban sample comprises 12 markets in Dhaka City, four in Chattogram City, 18 in other divisional cities and 56 in other district towns. The rural sample covers 64 markets across the 64 districts.
Three price quotations for each item and its varieties are collected from every selected market.Market strategy guide
The CPI basket covers 127 food items with 242 varieties and 256 non-food items with 507 varieties.
Prices are collected monthly in rural and urban markets, while data from Dhaka and Chattogram city corporations are collected weekly.
The statistics agency collects prices from selected shops and, for services, from selected service providers.
Average prices for individual items are then used in constructing the relevant price indices.
The methodology means that a sharp rise in a particular product does not necessarily translate into a similar increase in headline inflation if that product carries a relatively small weight in the overall CPI basket.
The agency uses Jevons formula, which is a geometric mean, for measuring the CPI.
