Every day, 45-year-old Osman Gani from Kalyanpur, Dhaka, faces an impossible choice: buy medicine for his ailing parents or purchase enough food to feed his family of five. As a mason, Gani earns less than Tk1,000 a day — a sum that once covered daily essentials just a few years ago. Now, with skyrocketing prices and stagnant wages, it’s barely enough for two meals.
“We used to eat fish once or twice a week. Now we survive on lentils and rice,” Gani says. “Everything costs more, but our income hasn’t increased.”
Gani’s struggle is far from unique. Across Bangladesh, millions of families are being pushed into extreme poverty by a toxic combination of high inflation, sluggish wage growth, and a weakening labor market.
A new report by the World Bank, titled Bangladesh Development Update 2025, paints a grim picture. The report warns that nearly 3 million additional people will fall into extreme poverty this year, pushing the country’s extreme poverty rate from 7.7% to 9.3%. The national poverty rate is also expected to rise — from 20.5% to 22.9% — meaning nearly 39 million people, or almost one in every four Bangladeshis, will be classified as poor.
Falling real incomes, rising inequality
At the heart of this deepening crisis lies a sharp decline in real incomes, as wages fail to keep pace with inflation. For more than three years (39 months), Bangladesh has faced a consistent gap between inflation and wage growth.
Recent projections from the World Bank and Asian Development Bank predict that inflation will exceed 10% in the current fiscal year.
According to the Bangladesh Bureau of Statistics (BBS), the inflation rate in March 2025 stood at 9.35%, while wage growth lagged behind at just 8.15%.
In 2024, inflation averaged 10.33%, but wages rose only 7.94%. This persistent disparity has eroded household purchasing power, especially for low-income families.
Food inflation, which hit a 16-year high of 14.10% in 2024, has placed even greater strain on household budgets, pushing many into financial distress.
In January 2022, wage growth briefly outpaced inflation. But that trend quickly reversed. Now, households are forced to make painful decisions: skip meals, take on debt, or withdraw their children from school — choices that risk long-term consequences such as malnutrition, school dropouts, and a cycle of intergenerational poverty.
Mustafa K Mujeri, former director general of the Bangladesh Institute of Development Studies (BIDS) and former chief economist at Bangladesh Bank, told the Daily Sun: “Inflation works like a regressive tax — it hurts the poor the most. When wages don’t grow in line with prices, real purchasing power shrinks. This makes essential goods unaffordable for low-income families and pushes them deeper into poverty.”
Weak labour market and a sluggish economy
The World Bank report also highlights the fragility of Bangladesh’s labor market — particularly for the informal sector, which accounts for over 86% of total employment.
Informal workers, such as day labourers, construction helpers, and street vendors, are among the most vulnerable. Most of these jobs offer no contracts, job security, or benefits. If a worker falls ill or there’s no work for a day, they earn nothing. In such conditions, even a minor increase in living costs can be devastating.
Meanwhile, economic growth has slowed, hampered by political uncertainty, weak revenue collection, declining private investment, and the lowest Annual Development Program (ADP) implementation in six years. The National Board of Revenue (NBR) fell short of its collection target by over Tk65,000 crore in the first nine months of FY 2024–25.
Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office, told the Daily Sun, “Bangladesh's economy is under significant pressure. Rising inflation is eroding household incomes, and weak investment is stalling job growth.”
He warned that while improving revenue is important, increasing taxes — especially VAT on essential goods — could further fuel inflation and worsen the crisis for ordinary people.
“The drop in food inflation is certainly a relief,” Dr Hussain added, “but non-food inflation has increased. Overall, the situation remains deeply challenging.”
Policy gaps and the road ahead
With the economy under strain, experts warn that inequality is likely to rise, potentially heightening social unrest and undoing years of development progress.
Without urgent policy interventions — such as targeted social safety nets and wage policies indexed to inflation — millions more could fall below the poverty line.
“We need a policy shift that prioritises the vulnerable — especially those in informal jobs and rural areas,” said an economist.
The World Bank has called for immediate steps to stabilise inflation, create employment, and expand social protection programs. Structural reforms are also recommended to improve the investment climate, enhance revenue collection, and strengthen public service delivery.
For families like Osman Gani’s, the future remains uncertain.
“We’re not lazy,” Gani says. “We work hard every day. But no matter how hard we try, we’re falling behind.”
If current trends continue, poverty in Bangladesh will not only be reflected in numbers — but in the silent suffering of millions.
The World Bank report highlights that high inflation and declining employment have had a significant negative impact on low-income families. In the first six months of the current fiscal year (2024–25), nearly 4% of workers lost their jobs. During the same period, wages for low-skilled workers fell by 2%, while wages for high-skilled workers declined by 0.5%.
Courtesy: Daily Sun.
Bd-pratidin English/Tanvir Raihan
