Rising rice, fish prices contribute 83.13pc to food inflation in June

Spiraling prices of rice and fish have emerged as a major concern as the prices of the duo together accounted for 83.13 per cent of food inflation in June this year.

The share of rice to the overall inflation jumped to 50.76 per cent in June from 40 per cent in May this year, according to a report revealed by the General Economics Division (GED) of the Planning Commission.

The report released on Sunday found that rice prices increased significantly in the last couple of months, though the overall inflation remained at single digit in the last six consecutive months, and June's overall rate fell below 9.0 per cent for the first time in 28 months.

The GED reveals that food inflation stood at 7.39 per cent in June, falling below 8 per cent for the first time since January 2023.

Medium varieties of rice contributed 25 per cent to overall food inflation, while coarse varieties contributed 17.82 per cent in June. All three rice varieties-fine, medium, and coarse-saw a 15 per cent price hike year-on-year in June, said GED.

Citing the USDA's December 2024 "Grain and Feed Update," the General Economics Division (GED) reported that the average price of coarse rice in November hit its highest level in a decade.

The persistent price surge, GED noted, may be attributed to a combination of factors-including rising input costs for fertiliser, seeds, labour, and irrigation; post-harvest losses reaching up to 26 per cent; increased transportation expenses; and growing market volatility.

The report noted that factors such as high input costs, post-harvest losses, rising transportation expenses, and speculative hoarding have likely contributed to this anomaly.

However, the GED stressed the need for further investigation to determine whether the issue stems from an actual shortage in supply or disruptions within the distribution chain.

Meanwhile, Bangladesh's external sector showed signs of resilience, with remittance inflows rising and the exchange rate remaining largely stable between Tk122.45 and Tk 122.70 per dollar in recent weeks, the report reveals.

Export earnings rebounded, with ready-made garments (RMG) continuing to account for more than 80 per cent of total export receipts, it added calling for structural diversification into ICT, pharmaceuticals, and agro-processing to reduce dependency on RMG.

The report highlighted that capital machinery imports-a proxy for investment sentiment-remained largely stable except for a one-time spike in October 2024.

The stability suggests consistent but modest industrial activity amid lower overall business confidence, according to the GED.

Private sector credit growth remained below 8.0 per cent for six consecutive months up to May 2025, reflecting tight monetary policy, lower demand for investment, and banks' cautious lending practices.

The report highlighted some significant challenges while providing outlook for the current fiscal year.

"The World Bank projects GDP growth between 3.3 and 4.1 per cent, while the Asian Development Bank forecasts 3.9 per cent." the report reveals.

However, the GED projected a moderate rebound to 5.1-5.3 per cent of growth in the current fiscal year, driven by improved remittance, manufacturing output, and a stable external environment.

The report also projected a lower foreign direct investment and limited fiscal space due to a revenue shortfall which would add further strain.

A disruption in NBR operations earlier in June-linked to protests against the proposed division of the tax body-hampered revenue collection but was later resolved, it added.

The report also underscores the government's renewed commitment to achieving Sustainable Development Goals (SDGs), particularly following the political changes in mid-2024. Bangladesh presented its third Voluntary National Review (VNR) at the United Nations in July, outlining reform priorities ranging from constitutional amendments to universal health coverage and SME support.

Despite progress in SDGs such as poverty, health, education, and clean energy, Bangladesh remains off track in gender equality, reduced inequality, and environmental goals. Institutional reforms and inclusive policymaking are deemed critical to bridging the gap between aspirations and outcomes, especially as the country prepares for LDC graduation in 2026.

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