Household purchasing power remains under pressure: Planning Commission Report

The latest report by the government's planning wing suggests that wage earners are struggling to cope with rising prices as their earnings are growing at a slower pace.

The General Economics Division (GED) of the Bangladesh Planning Commission published its Economic Update and Outlook for September 2026 on Monday.

According to the report, this pressure may persist until the large volume of bank deposits is channelled into private sector credit. The situation could deteriorate further if the government continues to borrow from banks and fails to increase revenue collection.

The latest report suggests that remittances are currently the main source of support for the country's foreign exchange reserves. However, if Bangladesh fails to increase export earnings soon, the country's foreign exchange reserve position could weaken in the future, potentially undermining its competitiveness in international markets.

The primary purpose of the General Economics Division (GED) of the Bangladesh Planning Commission is to oversee overall economic policymaking, conduct macroeconomic research, and coordinate national development plans.

30,000 taka monthly budget loses 2.3 days of purchasing power

The latest inflation data published by the Bangladesh Bureau of Statistics (BBS) suggests that a monthly budget of 30,000 taka, which could cover a household's expenses for 30 days a year ago, would now last around 27.7 days as headline inflation rose to 8.34 per cent in September. In effect, the same amount of money now buys less, reducing its purchasing power by the equivalent of about 2.3 days of household expenses each month.

People grow poorer despite wage growth

Wage growth failed to compensate for the loss of purchasing power, as wages rose by only 7.9 per cent in September, below the headline inflation rate of 8.34 per cent. As a result, wage-earning households continued to face pressure on their real purchasing power.

Private sector credit growth needs to accelerate to ease economic pressure

According to a report by the General Economics Division (GED) of the Bangladesh Planning Commission, banking sector deposits stood at 21,31,100 crore taka in August 2026, up 11.96 per cent year-on-year from 19,05,270 crore taka in August 2025.

However, private sector credit grew by only 4.75 per cent to 18,30,061 crore taka in August 2026, while public sector credit rose by 32.45 per cent to 7,22,461 crore taka.

The report suggests that the gap between deposit growth of 11.96 per cent and private sector credit growth of 4.75 per cent points to ample liquidity that is not being channelled into productive private investment.

Private sector credit is likely to remain subdued in the near term if borrowing costs remain high, business confidence recovers only slowly, and credit risks remain elevated. Heavy public sector borrowing may also crowd out private lending.

The pace of private sector credit recovery will therefore be a key indicator to watch. Policy attention should focus on easing financing costs, improving the investment climate, and strengthening the banking sector's ability to lend.

Remittance inflows continued to show strong growth in the current fiscal year, rising 21.4 per cent year-on-year to $513 million during October 1-5, 2026, compared with $422 million in the same period a year earlier.

Cumulative remittances reached $9.10 billion during July 2026 to October 5, up 13.7 per cent from $8.01 billion in the corresponding period of the previous fiscal year, according to the latest data.

Meanwhile, Bangladesh's gross foreign exchange reserves stood at $36.21 billion on October 11, 2026, while reserves calculated under the IMF's Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6), stood at $31.40 billion, according to Bangladesh Bank data.

Continued growth in remittance inflows is providing support to the country's foreign exchange reserves, although sustained growth in export earnings remains important for strengthening the external sector.