Inflation rose in Nov driven by rice, protein prices: Planning Commission report
Bangladesh’s external sector showed signs of gaining momentum, while the banking sector remained resilient, says the report.
Bangladesh's general inflation rose slightly in November, driven mainly by higher prices of rice and protein items, even as vegetables continued to provide some relief, according to the latest Economic Update & Outlook released by the General Economics Division (GED) of the Planning Commission.
Overall inflation increased to 8.29% in November, up from 8.17% in October. Food inflation climbed to 7.36% from 7.08%, while non-food inflation remained broadly stable at around 9%, says the report released today (24 December).
Although rice inflation showed a clear downward trend across all categories, falling to 12.26% in November from 13.77% in October, it remains elevated and continues to exert significant pressure on food prices.
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Medium rice inflation declined to 10.96%, fine rice to 15.43% and coarse rice to 11.04%.
Despite the easing, rice remained the single largest contributor to food inflation, accounting for 40.28% in November.
Protein items added further pressure: the combined contribution of fish and dry fish rose to 40.77%, while beef, hilsa and pangas fish also recorded higher contributions compared to October.
In contrast, vegetables continued to play a strong disinflationary role, though the magnitude of the impact moderated, with their negative contribution improving to -17.37% from -20.57% a month earlier. Potato and onion prices remained sharply disinflationary.
Wage growth lags prices
The report notes that the gap between price inflation and wage inflation narrowed in October but widened slightly again in November.
With wage inflation at 8.04% against price inflation of 8.29%, real incomes remain under pressure, although the relatively narrow gap suggests some partial adjustment through wage growth.
External sector, banking show resilience
Bangladesh's external sector showed signs of gaining momentum, supported by strong remittance inflows and modest export growth.
Meanwhile, the banking sector remained resilient, underpinned by steady deposit expansion.
Bank deposits reached Tk1,924,635.7 crore in October, registering a robust 9.62% year-on-year growth, reflecting continued depositor confidence.
Credit growth, however, moderated. Total domestic credit growth slowed to 9.62% in October from 10.20% in September, with public sector credit growth easing more sharply than private sector lending.
Interest rate spreads differ across banks
Weighted average interest rate (WAIR) spreads varied significantly across banking groups in October.
Foreign commercial banks recorded the highest spread at 8.88%, while specialised and development banks posted the lowest at 3.37%, reflecting their concessional and mandate-driven operations.
State-owned and private commercial banks showed similar spreads at around 5.6%.
The GED noted that a WAIR spread of around 5% is desirable, as it signals improved efficiency in the banking sector while balancing profitability and borrowing costs.
Overall, the report suggests that while inflationary pressures, particularly from food items, remain a concern, improving fiscal performance, stable banking indicators and strengthening external accounts provide grounds for cautious optimism in the near-term economic outlook.
