Bangladesh recorded the highest inflation rate among South Asian countries in 2025 and is expected to retain that position in 2026, according to the United Nations’ newly released World Economic Situation and Prospects for 2026 report. The UN estimates Bangladesh’s average inflation in 2025 at 8.9 percent, with a projected decline to 7.1 percent in 2026 — still the highest in the region.
The Bangladesh Bureau of Statistics places the country’s 2025 average inflation slightly lower at 8.77 percent, but both figures confirm that inflation has remained persistently high for three consecutive years. While Bangladesh’s economy is showing signs of recovery, with GDP growth forecast at 5.1 percent in 2026, rising prices continue to strain household budgets.
Inflation, often described as a “hidden tax,” has forced many families to cut spending on essentials or take on debt as wages fail to keep pace with rising costs. The interim government has attempted to curb price pressures through higher interest rates, tax reductions on daily necessities such as oil, potatoes, onions and eggs, and efforts to stabilize imports. Despite these measures, inflation has risen again over the past two months.
Across South Asia, inflation remains significantly lower. In 2025, Maldives recorded 4.9 percent, Pakistan 4 percent, India 2.7 percent, Bhutan and Nepal both 3.4 percent, and Sri Lanka just 0.6 percent. The UN projects 2026 inflation of 4.1 percent for India, 7 percent for Pakistan, and 3.9 percent for Sri Lanka, while Bangladesh is expected to remain the regional outlier.
Although countries like Sri Lanka and Pakistan previously faced extreme inflation — 49 percent in Sri Lanka in 2021 and 30 percent in Pakistan in 2022 — both have since brought it under control. Bangladesh has reduced inflation as well, but the pace of improvement remains slower than its regional peers, keeping the cost-of-living crisis one of the country’s most pressing economic challenges.
