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Bangladesh is set to take a crucial decision on domestic fuel prices in the coming days, as rising global energy costs and mounting fiscal pressures force policymakers to balance economic stability against growing public hardship.
Finance Minister Amir Khasru Mahmud Chowdhury signalled in Chattogram on Friday that a decision on fuel price adjustments is imminent, raising concerns that any increase could trigger a fresh surge in inflation when households are already under strain.
According to the Bangladesh Bureau of Statistics, overall inflation rose to 9.13% in February, a 10-month high, while food inflation climbed to 9.30%, the highest level in over a year. Economists warn these figures could climb further if fuel prices are raised.
Inflation has persistently outpaced wage growth for more than four years, eroding household purchasing power.
While inflation has remained above 8% in recent months, wages have grown modestly at around 7%-8% annually, deepening financial stress, particularly for low- and middle-income households that spend a larger share on food and energy.
Government deliberations are being shaped by global energy market trends.
Sources at the Bangladesh Petroleum Corporation (BPC) say escalating tensions in the Middle East have pushed crude oil prices above US$100 per barrel, while liquefied natural gas (LNG) prices have surged by 20%-25% in recent weeks, significantly increasing import costs.
The finance minister acknowledged that sustaining subsidies under these conditions is becoming increasingly difficult, indicating that price adjustments may be unavoidable.
The International Monetary Fund (IMF) has also warned that higher oil prices could fuel global inflation.
Managing Director Kristalina Georgieva recently said a sustained 10% rise in oil prices could increase global inflation by about 0.4 percentage points.
“An increase in fuel prices will quickly pass through to transportation and production costs, raising the prices of most goods and services,” she said at a recent briefing ahead of the fiscal 2026-27 budget.
Local analysts share similar concerns. The Centre for Policy Dialogue (CPD) cautioned that rising fuel costs could ripple across the economy amid ongoing geopolitical tensions.
CPD Distinguished Fellow Dr Mustafizur Rahman noted that Bangladesh’s lack of a strategic fuel reserve leaves it vulnerable to sudden global shocks, limiting the government’s ability to stabilise domestic markets.
At the consumer level, pressure is already evident. Prices of essentials, including cooking oil, meat, vegetables, and LPG cylinders, have risen sharply in recent weeks, with LPG often selling above government-set rates due to supply constraints and higher distribution costs.
Traders cite rising transport expenses and supply chain disruptions, though producers deny any significant production shortfall.
Economists warn the country may be entering a second-round inflation cycle, where initial cost increases lead to broader and more persistent price hikes.
The broader economic outlook adds to the concern. According to the Planning Commission’s General Economics Division, GDP growth has slowed to around 3.5% in FY25, while investment remains weak.
The investment-to-GDP ratio has fallen to about 28.5%, raising concerns over job creation in an economy that adds roughly 20 lakh workers to the labour force each year.
With wages continuing to lag behind inflation, many households are facing declining real incomes, depleted savings, and growing reliance on borrowing.
Experts caution that fuel price hikes tend to have widespread and lasting effects.
Higher transport and energy costs feed into food prices, manufacturing, healthcare, and services, while domestic prices are often slow to fall even when global conditions ease.
“For ordinary citizens, the stakes are high,” said Mustafa K Mujeri, former chief economist of Bangladesh Bank. “After nearly four years of elevated inflation, many families are already struggling. A further fuel price increase could make basic necessities even less affordable.”
Despite the pressures, the government maintains that energy security remains its top priority. Officials say fuel imports continue and supply is stable for now, but with global uncertainty persisting, policymakers face a narrowing window to act.
As Bangladesh awaits the final decision, the looming fuel price adjustment underscores a broader dilemma: how to manage external shocks without placing an unbearable burden on consumers.