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The recent increase in fuel prices and implementation of a new pay scale for government employees could make it harder for Bangladesh to achieve its inflation target, Bangladesh Bank has warned.
The observation was made at the 14th meeting of the central bank’s Monetary Policy Committee (MPC) held on Wednesday to review developments in the country’s macroeconomy. The Bangladesh Bank has also published the MPC resolution for September 23.
The central bank said headline inflation, although on a declining trend, remains above the government’s 7.5% target for fiscal 2026-27.
The MPC noted that international energy prices remain volatile amid the prolonged conflict in West Asia. Against this backdrop, Bangladesh raised the prices of diesel, petrol, octane and kerosene by Tk20 a litre from September 21.
The new prices are Tk135 for diesel, Tk160 for petrol, Tk165 for octane and Tk155 for kerosene.
The central bank said the fuel price hike could add to inflationary pressure. It also identified the implementation of the new government pay scale as another potential source of pressure on prices.
The new pay structure took effect from July 1, raising the basic salary of government employees in the lowest grade from Tk8,250 to Tk20,000 and that of the highest grade from Tk78,000 to Tk156,000.
The increases are being implemented in phases, with the full revised basic salaries scheduled to take effect from July 2027.
The concerns come as point-to-point inflation stood at 8.26% in August, down from 8.32% in July, according to Bangladesh Bank data.
Policy rate unchanged for now
The MPC decided to closely monitor the impact of domestic and global developments on GDP growth and inflation before considering any change in the policy rate.
Bangladesh Bank had cut its policy rate by 50 basis points to 9.5% in July, effective from August 2, according to its official data.
The central bank had raised rates repeatedly from late 2022 as part of efforts to contain inflation, with the policy rate reaching 10% in October 2024.
