At a time when dwindling foreign exchange reserves and IMF loan conditions are weighing heavily on the interim government, Finance Advisor Salehuddin Ahmed has set his sights on keeping the general inflation rate within 6.5 percent in the upcoming fiscal year.

Salehuddin set the inflation target in his budget proposal for FY26 presented on Monday.

Different initiatives taken by the interim government have managed to ease point-to-point inflation from 10.89 percent in December, 2024 to 9.17 percent in April, Salehuddin noted.

“We are delighted that during this year’s Ramadan, the market for essential commodities was very stable. If this trend continues, point to-point inflation will come down to 8 percent in June,” he said.

The Medium-Term Macroeconomic Policy Statement for the budget states that the revised forecast of average inflation in the 2024-25 fiscal year could be 9 percent. It expressed hope that this would come down to 6.5 percent in fiscal year 2025-26, to 6 percent in fiscal year 2026-27, and 5.5 percent in 2027-29.

In the outgoing 2024-25 fiscal year, former finance minister AH Mahmood Ali had also aimed to keep inflation at 6.5 percent. That target was missed. From March to December 2024, inflation remained above 10 percent for 10 consecutive months.

According to the Bangladesh Bureau of Statistics (BBS), the 12-month moving average inflation from May 2024 to April 2025 stood at 10.21 percent—one of the highest in decades. This has placed enormous strain on lower and middle-income households struggling to meet basic expenses.

From July to December in the current fiscal year, inflation remained above 10 percent. In the five months until May, the inflation rate stood in the 9-10 percent range. It was 9.05 percent in May.

However, what burdens ordinary people most is food inflation. From July 2023 to January 2024, food inflation remained above 10 percent, peaking at 14.10 percent in July, the highest in 13 years.

As of May 2025, food inflation was 8.89 percent, while non-food inflation stood at 9.42 percent.

In his budget speech, the finance advisor said:

“Over the past months, we have consistently adopted a contractionary monetary policy to control inflation. As a result, the policy rate was gradually enhanced by 150 basis points to 10 percent. At the same time, the Standing Lending Facility (SLF) rate increased to 11.5 percent.”

“According to recent estimates, the weighted average interest rate of commercial banks stands at about 12 percent. Supportive fiscal policy has also been pursued to strengthen the efforts made under the monetary policy. Overall, the government expenditure has been reduced significantly through the reduction of unnecessary expenditure. The positive effects of such a restrictive policy are already beginning to become visible.”

The budget’s Medium-Term Macroeconomic Policy Statement says, “The government’s top priority is to control inflation. Until it is brought under control, the contractionary monetary and fiscal policies will continue.”