Soaring cost of living puts Bangladesh’s middle class in a tight spot

Experts have voiced concern over exclusion of middle-income families from the social safety net, saying many of them are joining the ranks of new poor as a result of rising inflation.

Md Shahnawaz Khan Chandan, Md Asaduz Zaman

Md Shahnawaz Khan Chandan, Md Asaduz Zaman

The Daily Star


April 11, 2022

DHAKA – Excluded from the government’s social safety net, middle-income families are struggling to cope with the rising prices of basic goods and services.

“Inflationary pressure, particularly on poorer households, is more severe than what the official figure suggests.”

Economist Hossain Zillur Rahman

The inflation rate rose to 6.17 percent in February from 5.6 percent in January, according to Bangladesh Bureau of Statistics.

It might be just a figure in economic terms, but for a middle-income earner like Md Abdul Hye, a senior officer at a private bank, it meant a decline in his purchasing power.

Hye, who runs a family of six with his monthly income of around Tk 60,000, said he was finding it hard to meet his family’s basic needs with his earnings and some contribution from two of his three children.

“Whenever I see reports of price hikes in newspaper, I panic. I cannot bear the thought of failing to provide for my children’s education,” said an anxious Hye.

His elder son and daughter will complete university education next year, while his younger son is a class-XII student.

“I’m struggling to pay their tuition fees though two of my children support me by doing part-time jobs,” said the 53-year-old banker.

His wife Parisa Akhter also feels the pinch of soaring prices.

“The situation is so dire that if any of us falls sick and needs to be hospitalised, we don’t have any savings to pay for treatment. I wish I could do a job and support my husband…,” said Parisa.

Hye said, “The government provides cash incentives and other support to ultra-poor families but we don’t get any help front any quarter… We cannot even stand in queues behind OMS [Open Market Sales] trucks.”

He is not alone. Many like him are grappling with the soaring cost of living.

Rezwan Haque, an NGO worker, earns around Tk 35,000 per month. He said it’s impossible for him to support his three-member family with this income.

“My wife is six months pregnant. She needs nutritious food and medicine. My mother is suffering from old age complications.”

To meet the expenses, Rezwan works as a delivery man after office hours to earn some extra money.

“After office hours, I work as a delivery man for an online food and grocery delivery platform to supplement my meagre income.

“Initially, I felt very sad and embarrassed to do this job. But gradually I realised that many people like me are doing it for extra money to survive in this situation…

“After paying for basic food, medicine, house rent and transport cost, I cannot save a penny,” he lamented.


Experts have voiced concern over exclusion of middle-income families from the social safety net, saying many of them are joining the ranks of new poor as a result of rising inflation.

Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre (PPRC), said, “Inflationary pressure, particularly on poorer households, is more severe than what the official figure suggests.”

This is clearly hurting the poor and even segments of the middle class because incomes have not increased in keeping with such price hikes, he noted.

“The government doesn’t appear interested in seeing this as a national issue, but sees it through a bureaucratic and ruling party lens. They are reluctant to engage social actors in meaningful ways, particularly in the challenging task of listing the people who really need support.”

To prevent the situation from worsening further, experts urged the government to include the middle class in social safety net programmes, and prepare credible lists of the people in need.

According to Prof Bazlul Haque Khondker, teacher of economics at Dhaka University, around 70 percent of the population, who don’t have any financial resilience, are not covered by the government’s safety net programmes.

“The Open Market Sales programmes will not be of much help to these people. The government needs to prepare a proper database and provide them with financial support,” he said.

Dr Nazneen Ahmed, an analyst at the United Nations Development Programme (UNDP), said, “The government may help the private sector expand and create more jobs for the middle class. It can also provide small loans to families in crisis through Mobile Financial Services like Rocket and bKash.”

Hossain Zillur put emphasis on preparing credible lists of the needy families in a transparent way before launching a safety net programme.

“Last year, the government announced it would give Tk 2,500 each to five million people. Eventually, it could cover only 3.4 million people — that too amid allegations of corruption in preparing the list of beneficiaries.”

He said it’s not an impossible task to find out those who need the support most.

“But the government has been very reluctant to involve social and non-governmental actors in the process… The issue is national, and the government needs to use all capacities available within the country.”

Asked what measures the government can take to support middle-income families in this situation, he said the government can expand programmes like Open Market Sales to the district and upazila level.

Stressing the need for reducing non-food expenditure burden, he said middle-income and lower middle-income families have to bear the burden of high utility bills along with quite high taxes.

“They can avoid buying fish, meat or expensive food items but they cannot avoid paying electricity or gas bills and transport fares that are on the rise.”

He pointed out that many of these services such as electricity, water and gas can be provided at an affordable price if the government can ensure good governance and transparency in these sectors.

“Why is the electricity cost so high? The government is paying billions of taka to power plant owners in the name of capacity charge without using the plants.

“Bangladesh is probably the only country where transport costs rose during the pandemic and the government couldn’t intervene… If the government ensures good governance in these sectors, middle-income families will be able to save a significant amount of money from their essential non-food expenditure.”

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