While South Asian countries have undergone one political change after another, the pace of the economy is not the same for all. Sri Lanka has overcome political instability and is now on the path to stability, with inflation in the country coming down to 1.5%.
In contrast, the inflation rate in Nepal, which has recently undergone political change, has stood at 5.2%. Not only that, but the rate in Pakistan, which is also in economic distress, is at 5.6%.
However, consumers in Bangladesh are distraught over the long-term uncontrolled price increase.
According to government data, inflation in Bangladesh is still above 8%.
Compared to other South Asian countries, Bangladesh has the highest inflation rate, while in India and Sri Lanka it has come down to below single digits.
Food inflation remains at 8.29% in Bangladesh.
According to the latest data from the Bangladesh Bureau of Statistics (BBS), the country's overall (point-to-point) inflation in August 2025 was 8.29%.
Of this, inflation in the food sector stood at 9.3% and in the non-food sector at 7.1%.
Although the prices of food grains, onions, rice, oil, and eggs remained stable, there is significant pressure on the overall index due to high prices of vegetables, meat, and dairy products.
Economists say that the government's initiatives to monitor the market and increase food stocks have yielded some results, but structural cost increases and currency depreciation remain major challenges in controlling inflation.
Bangladesh Bank has already decided to keep the policy interest rate unchanged and limit the money supply so that prices come under some control.
According to the Asian Development Outlook report published by the Asian Development Bank (ADB) on September 30, Bangladesh's overall inflation was 9.7% in FY24, while the average annual inflation in the last fiscal year was 10%—the highest since at least 2013.
At the same time, the rate in the Maldives and Pakistan was 4.5%, in Nepal 4.1%, and even lower in India and Bhutan.
The ADB has predicted that Bangladesh's inflation will decline to 8 percent in the 2025-26 fiscal year. However, it has also warned that this will also be the highest rate among South Asian countries.
Meanwhile, the overall economy of South Asia is gradually moving towards stability. However, inflation in the food and energy sectors is still a major concern in countries like Bangladesh and Pakistan.
In contrast, the experience of India and Sri Lanka shows that it is possible to quickly bring inflation under control if a tight monetary policy, effective market supervision, and production incentive policies are adopted.
Economists say that in Bangladesh, domestic spending on food and energy is the main driver.
On the other hand, in India, the continuity of agricultural production and market management skills are helping to control inflation.
Sri Lanka has succeeded in recovering the fastest in South Asia through cost containment and implementation of strict policies.
Why this discrepancy?
Global prices of energy and food commodities have come down somewhat. Bangladesh Bank has also tightened policies several times in the last two years.
The policy rate was increased in 11 phases from May 2022 to October 2024 to 10%. Why it is not yielding results is now a big challenge for policymakers.
In this context, Dr. Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD), believes that Bangladesh Bank has been late in showing the necessary strictness.
She said: “If steps had been taken on time, the results would have been different. Now, a situation of ‘too little, too late’ has arisen,” she said.
According to her, along with monetary policy, supply-side weakness is also playing a major role. She noted, "Bangladesh is largely import-dependent. As a result, the depreciation of the taka is increasing prices, which is also reducing the impact of monetary policy."
Currency depreciation
According to Bangladesh Bank, the value of the currency has depreciated by 43 percent against the US dollar since fiscal year 2021. This has led to a manifold increase in the prices of import-dependent goods. The bank's latest policy report states, "Due to the depreciation of the currency, import costs have increased, which has had a direct impact on the domestic market." Political instability and severe floods in August-September 2024 have disrupted the supply chain, making food prices even more volatile.
Market deregulation and structural weaknesses
Fahmida Khatun told Bangla Tribune: "Our market is not competitive. The price at which farmers sell their products, consumers have to buy them at many times the price. Due to the lack of transparency in the market system and control by syndicates, the benefits of the policy do not reach the consumer level."
Money printing
Virupaksha Pal, professor of economics at the State University of New York and former chief economist of Bangladesh Bank, has called this “policy duality.”
“On one hand, the government is adopting a policy of currency contraction by increasing interest rates, while on the other hand, money is being printed to meet the liquidity crisis in the banking sector. This is actually increasing inflation.”
Bangladesh Bank bought $1.7 billion from the market between July and September, which was paid for by printing local currency. This is creating an additional flow of money in the market.
Political instability, stagnation in investment
Ashiqur Rahman, chief economist of the Policy Research Institute (PRI), believes that political instability and stagnation in investment in the last year have also played a role in inflation.
“The supply of goods in the market has been disrupted; the value of the currency has also depreciated. As a result, costs have increased in both production and imports,” he said.
According to Rahman, if political stability returns after the upcoming national elections, supply-side constraints will be removed and inflation may decrease somewhat.
Future risks
The International Monetary Fund (IMF) has already warned that the impact of the depreciation of the taka and the possible imposition of counter-tariffs by the United States could increase prices in FY26 as well.
Fahmida Khatun of CPD also believes that the possible salary hike of government employees and the additional spending of candidates before the elections could boost inflation again.
“It will be difficult to get relief in 2026 as well. Keeping prices under control will be a big challenge for the government,” she added.
India
In neighboring India, annual consumer inflation stood at 2.07% in August 2025, which is the lowest in South Asia in recent times.
The country's central bank (RBI) has repeatedly said that they have succeeded in keeping inflation below the 4% target.
This achievement has been possible because price increases in India's food sector have been limited.
In particular, the consumer index has come down due to relatively low prices of milk, wheat, and vegetables.
Analysts believe that India is currently one of the most stable economies in South Asia due to productive agricultural policies, appropriate subsidies, and quick supply to the consumer market.
Pakistan
Inflation in Pakistan was 5.6% in September this year. This is a positive signal after hovering in double digits for the last two years.
However, the country's central bank believes that new challenges lie ahead due to pressure on the price of imported goods and energy supplies. Uncertainty may arise.
Foreign exchange crisis, political instability, and tax hikes—these three reasons are why the purchasing power of the general public is not increasing as before.
5.2% in Nepal, a stable trend
According to the latest data in Nepal, annual inflation is about 5.2%.
Prices in the food and clothing sectors have increased slightly, but the overall pressure has eased due to the reduction in the prices of imported goods.
The country is dependent on imports of goods from India and China, which directly affects the price level of neighboring countries. Nepal's central bank has limited the money supply to maintain 'price stability.'
Promising position in Sri Lanka
After the economic disaster it was confronted with, Sri Lanka is now on the path to stability. In September this year, the country's annual consumer price inflation fell to 1.5%.
Where this rate was more than 50% in 2022, it has now practically come down to single digits.
Due to tightening monetary policy, reducing the budget deficit, and restructuring international debt, the country's economy is gradually returning into balance.
Moderate inflation in Bhutan, Maldives
Inflation in Bhutan has averaged 4%-5% in recent months. Although food and transport costs have increased slightly, government subsidies have kept prices affordable.
In the Maldives, on the other hand, prices have remained relatively stable despite the recovery of the tourism sector. In the country, inflation was around 3% in mid-2025, below the South Asian average.