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DHAKA: Nearly half of all households in Bangladesh have been forced to borrow money to meet essential expenses over the past year as rising prices and the cost of living continue to outpace incomes, with rural families facing greater financial pressure than their urban counterparts.
A special survey by the Bangladesh Bureau of Statistics (BBS) found that 47.42 per cent of households had taken loans to cover essential expenses during the previous 12 months.
The findings also show that average monthly household expenditure nationwide has exceeded average income, leaving families struggling to make ends meet.
According to the survey, 51.91 per cent of rural households borrowed money to meet essential expenses over the past year. The proportion was 40.19 per cent in urban areas and 32.11 per cent in city corporation areas.
At the national level, average monthly household income stood at Tk 33,513, against average expenditure of Tk 35,311. This means households spent Tk 1,798 more than they earned each month, on average.
Household expenditure varied significantly by location. Average monthly spending was highest in city corporation areas at Tk 46,778, followed by Tk 37,344 in urban areas and Tk 32,532 in rural areas.
Food accounted for roughly half of total monthly household expenditure nationwide, with the remainder going towards non-food items and services. However, spending patterns differed between rural and urban households, with rural families allocating a relatively larger share of their budgets to food.
In contrast, non-food expenses placed greater pressure on urban households. In city corporation areas, 56.7 per cent of monthly household expenditure went towards non-food items and services.
The findings mark a shift from the situation recorded in the BBS Household Income and Expenditure Survey 2022, when average monthly household income was Tk 32,422, compared with expenditure of Tk 31,500. At that time, average income exceeded expenditure, but the latest survey shows that the situation has reversed.
The National Pay Commission requested the special survey to help formulate recommendations for salary increases under the ninth national pay scale.
The survey was conducted from September 14 to 18 last year, covering 3,000 households in rural, urban and city corporation areas. Data were collected from 150 sampling units using tablet devices and digital computer-assisted personal interviewing.
Zahid Hussain, former lead economist at the World Bank’s Dhaka office, said the findings reflected the weak macroeconomic conditions Bangladesh had experienced since the Covid-19 pandemic.
He said the country’s economic growth had slowed over the past several years, while inflation had remained persistently high with little indication of a sustained decline. Employment had stagnated, and real wages had continued to fall, he added.
Official data show that inflation remained higher than wage growth for 56 consecutive months through September. According to the BBS Wage Rate Index, the wage growth rate fell to 7.9 per cent in September from 8.05 per cent in the previous month.
The index tracks monthly wages of low-income skilled and unskilled workers in 63 occupations across the agriculture, industry and services sectors.
“Ask any household about its financial situation and the likely answer is clear: income is declining while expenses are rising. As a result, many people have little choice but to borrow,” Zahid Hussain said.
He stressed that the increase in household expenditure did not reflect an improvement in living standards. Rather, it was driven by higher prices of essential goods and the rising cost of living.
Explaining why rural households were more likely to fall into debt than urban families, Hussain said income stagnation was more pronounced in rural areas, while cities offered comparatively greater employment and economic opportunities.
He noted that remittances played a positive role in the rural economy, but their benefits reached only around 7 to 8 per cent of rural residents. As a result, a large section of the population was relying on accumulated savings to get by, he said.
Hussain said the BBS findings largely reinforced the World Bank’s macroeconomic outlook, which warned that poverty was rising in Bangladesh.
According to the World Bank’s latest Bangladesh Development Update, released on October 6, prolonged economic weakness was undermining living standards, largely because of insufficient labour demand and persistently high inflation.
The report estimated that the national poverty rate could rise from 18.7 per cent in 2022 to 22.5 per cent in 2026.
Persistent inflation over the past four years has been a major source of economic pressure, steadily eroding purchasing power and reducing households’ ability to meet everyday needs.
The World Bank report also highlighted the severe energy shortage as an additional burden. Businesses have had to shorten operating hours, some factories have closed, and opportunities for new employment, particularly in the industrial sector, have remained limited.
Together, high inflation, stagnant incomes, wage growth trailing price increases and limited employment opportunities are intensifying financial pressure on ordinary households. The BBS survey’s finding that nearly half of the country’s families have resorted to borrowing offers a stark indication of the depth of that pressure.