Why does Bangladesh struggle to rein in inflation while South Asian nations tackle the woes?


In 2023, South Asian nations celebrated a significant victory as many successfully curbed inflation, bringing relief to populations grappling with the aftermath of the coronavirus pandemic and the Russia-Ukraine war.

Even amidst its worst economic crisis since independence, Sri Lanka managed to reverse an unprecedented spike in consumer prices, marking a positive turn.

However, Bangladesh faced challenges in containing inflation, with a notable 9.42 per cent increase in the consumer price index (CPI) in November. This persisted despite a global decrease in commodity prices over recent months.

Bangladesh’s inflation surge over the past eighteen months can be attributed to a combination of external and internal factors.

External factors include supply chain disruptions from the Russia-Ukraine conflict and elevated commodity prices, while domestic issues encompass a 28 per cent depreciation of the taka against the US dollar, persistent foreign currency shortages, and a 30 per cent drop in reserves leading to import restrictions.

Critics, including economists and analysts, blame the central bank for not utilizing monetary tools effectively and criticize the government for a delayed response, resulting in inadequate market supply.


A comparative analysis of CPI data across South Asian countries reveals Sri Lanka’s successful reduction in inflation, contrasting with Pakistan’s stagnant consumer prices.

India, Bhutan, Maldives, and Nepal experienced price drops, while Afghanistan’s inflation dipped into negative territory.

Sri Lanka’s inflation, which reached 51.7 per cent in January, plummeted to 3.4 per cent in November, credited to responsive monetary policy, base effects, weak demand, an appreciating rupee, and muted second-round effects, as per the International Monetary Fund (IMF).

While Bangladesh’s central bank initiated monetary tightening in July and further raised rates in November, critics argue that these measures are “too little and too late.”

The Asian Development Bank (ADB) anticipates a gradual easing of inflation in the coming months, driven by contractionary monetary policy, measures for a market-based exchange rate, lower global commodity prices, and improved crop outlook.