Real income keeps falling for 3.5 years
However, the narrowing gap between wage growth and inflation offers only a vicarious sense of relief, as it reflects a slowdown in inflation rather than any meaningful improvement in wages
For three and a half years, wages in Bangladesh have consistently lagged behind the rising cost of living – eroding the real income of workers month after month.
In July, average wages for low-paid skilled and unskilled labourers rose slightly to 8.19%, up from 8.18% in June, according to the Bangladesh Bureau of Statistics (BBS) data released on 7 August.
But inflation climbed faster, reaching 8.55% in July. That leaves workers once again falling behind – extending a streak of declining real incomes to 42 consecutive months since February 2022.
A year ago, in July 2024, inflation had surged to 11.66% while wage growth remained stuck at 7.93% – a painful 3.73 percentage point gap. Now, that gap has shrunk to only 0.36 percentage points.
Keep updated, follow The Business Standard's Google news channel
However, the narrowing gap between wage growth and inflation offers only a vicarious sense of relief, as it reflects a slowdown in inflation rather than any meaningful improvement in wages. The burden on households remains.
Speaking to The Business Standard, Dr Mustafa K Mujeri, Executive Director at the Institute for Inclusive Finance and Development (InM), said, "When the rate of wage growth consistently falls behind the rate of inflation, it means their real income is declining."
He further explained, "Whenever wage growth lags behind inflation and this trend continues over time, the purchasing power of low-income people keeps shrinking. As a result, their standard of living deteriorates."
This deterioration has real consequences. "They are no longer able to buy the amount of food they need – or are forced to buy less. This leads to undernutrition, which will lead to a rise in healthcare expenses," he said.
"If this situation persists, the number of poor people in the country will increase", he warned.
Meanwhile, sectoral data showed wage growth slowed in both agriculture (8.37% in July, down from 8.40% in June) and services (8.40%, down from 8.43%), while industry saw only a marginal improvement (7.91%, up from 7.87%).
Division-wise, gains were limited to Dhaka and Chattogram, with wage growth falling in all other divisions.
The BBS tracks these changes through its Wage Rate Index (WRI), which monitors wage trends across 63 occupations, including 17 in agriculture, 30 in industry, and 16 in services.
Inflation snaps streak of declines, rises to 8.55% in July
Bangladesh's inflation edged up to 8.55% in July, breaking a three-month easing streak, driven by simultaneous hikes in both food and non-food prices.
Before the latest uptick, inflation had steadily declined – from 9.35% in March to 9.17% in April, 9.05% in May, and 8.48% in June.
Food inflation rose to 7.56% from 7.39% in June – reversing a seven-month downtrend – while non-food inflation slightly up to 9.38% from 9.37%. Although food prices remain below the record 14.10% seen in July 2024, the reversal hints at renewed pressure on household budgets.
Meanwhile, the central bank sets a target of containing inflation within the 6.5% ceiling for FY26.
