Middle-Class Nightmares

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Price hikes in daily necessities are worsening the financial situation of the middle-class.


Middle-class citizens in Bangladesh suffered the most throughout 2022, according to research by the Consumers Association of Bangladesh (CAB), since Dhaka city’s average annual inflation rate that year was 11.08%. The study was created using monthly price information for 25 services, 49 non-food products, and 141 food items. Eleven markets in the Dhaka north and south city corporation zones provided the information. Rice, wheat, pulses, bakery goods, sugar, fish, eggs, domestic chicken, edible oil, imported fruits, vegetables, spices, tea, coffee, local and imported milk, washing and personal hygiene products, and transportation expenses were some of the main factors taken into account for the CAB study.

The situation has not changed much. According to the most recent data from the government-run Trading Corporation of Bangladesh (TCB), the average annual increase in price for practically all necessities has been between 1% and 151%. Typically, the price of potatoes remains low during the winter, but this winter was different because the cost of vegetables has soared by 83.33% since last year. Fine and medium-quality rice prices have increased by 3.77% and 5.47% respectively over the same time frame.

According to the TCB’s market price report from 31 January 2023, the average price of wheat and flour per kilogram has increased by 66.2% and 40.63%, respectively, over the last year. The Russia-Ukraine war caused the inflation rate to start increasing in February last year. After a brief decline in May, the inflation rate resumed increasing in June. After the latest increase in fuel costs, they increased again in August. According to the CAB report, the rate increased for two more months before dipping a little in December. Up until April of last year, the capital’s food inflation rate had been on the decline, but starting in May, both the rate for food and non-food products began to rise.




Both supply and demand side shocks were brought on by the COVID-19 pandemic. Global inequality increased as a result of the epidemic as the rich got richer and the poor got poorer.

Demand for both food and non-food items has increased as the COVID-19 situation has improved. However, the Russia-Ukraine War has hampered production and trade, leading to catastrophic fuel and food shortages worldwide. As a result, the globe is currently dealing with significant global supply chain disruptions. As a result, prices for everything from basic food items to expensive things have skyrocketed. Due to the COVID-19 epidemic, a new class of poor people have developed, and their numbers have increased as a result of continued inflationary pressure that disproportionately affects low- and middle-income households.

The global problem of inflationary disparity has returned due to an increase in price levels. Due to disparities in the price increases of various items and variations in household spending patterns, inflation inequality has an unequal impact across various income groups. The price elasticity of demand (PED) is lower for higher-income groups and higher for medium and lower-income groups. The PED measures how quickly demand changes in response to price changes. When people are more price sensitive, it is greater, and when they are more price insensitive, it is lower. Therefore, the impact of rising costs is greater for middle- and low-income groups whereas it is less noticeable for higher-income groups.

Because of this, lower- and middle-income households with limited consumption baskets must further reduce consumption by omitting necessities. The higher income groups, in contrast, need to make little to no modifications. The lack of savings among middle-class and low-income people makes smoothing their consumption more difficult. Additionally, the savings that the aforementioned categories possess are kept in cash and low-interest bank accounts, neither of which are protected from increases in price.

Even if the cost of basic necessities rises, it is manageable if people’s incomes rise. However, incomes have not shown proportionate growth. Even people with modest incomes face a dire situation. There is no optimism that this year will be any better than last year, which was horrible. Once more, those in charge of ensuring their protection are the ones driving up product prices.

Unusual price increases have been seen for rice. In addition, lower and lower-middle-class households have seen an increase in average home and apartment rent. Data from the BBS show that in 2017 inflation hit its highest level since 2011. Millions of Bangladeshi low- and middle-income families still continue to suffer as a result of rising inflation, which has affected both urban and rural areas equally. The non-food basket, which includes non-food products and other services, accounts for a very small portion of total consumer spending in the megacity of Dhaka. These commodities’ prices increased steadily in the second part of the year, which resulted in significant non-food inflation.


Lower- and middle-income households with limited consumption baskets must further reduce consumption by omitting necessities. The higher income groups, in contrast, need to make little to no modifications.



The cost-of-living issue that Bangladesh’s middle class is currently experiencing is unprecedented, making it harder for them to survive. The middle class is finding it difficult to make ends meet due to their stagnating income. Although the Asian Development Bank (ADB) defines the middle class as having an income between USD 2 and USD 20 per day, more than 20% of Bangladesh’s population would fall into this category. The hardship of the middle class is typically greater since, in contrast to those who are less fortunate, they are more likely to perceive social assistance as degrading, for example, going to TCB trucks to buy goods at discounted prices. Additionally, they cannot afford to buy everything in the same quantities as before as prices are out of their purchasing power.

The price of a product cannot be anticipated to drop once it increases, according to CAB Chairman Ghulam Rahman’s comments from last month. Since the earnings of the top earners have been significantly larger than those of the lower- and middle-income earners, he encouraged the government to adopt particular measures to boost the income of the general populace. According to the CAB chief, the Russia-Ukraine War had an effect on the nation’s economy as well.

The most recent Household Income and Expenditure Survey (HIES 2022) data reveals that while Bangladesh’s poverty rate has decreased significantly, income inequality has reached an all-time high. This perplexing development calls into question the character of the recent economic growth. According to the poll, poverty reduction was more pronounced in rural areas because there was less income growth and inequality there. In contrast, in metropolitan areas, poverty reduction was slower, and income growth was faster, but there was a rise in inequality. Poverty decreased by 1.2 percentage points from 2010 to 2016. The change was 0.93 percentage points from 2016 and 2022. However, the rate of decline in extreme poverty increased, going from 0.78 percentage points between 2010 and 2016 to 1.2 percentage points between 2016 and 2022.



The middle class is needing to keep everything in check, taking count of the last taka spent to make sure there remains enough to last the month. Sacrifices are being made in non-essential activities such as pursuing entertainment and relaxation such as going to the movies on a weekend or going out to eat at restaurants. The focus is now on findings ways to increase savings as they are anticipating the situation to get worse in the future.

Some full-time white-collar employees have also sought additional sources of part-time revenues through ride-sharing apps. A service-holder at a private bank expressed his concerns to a national daily newspaper about the rising prices and his coping mechanism. With his son’s SSC examination coming up next year, he is no longer able to rely solely on his salary to ensure that his son gets tutoring lessons. As a result, he completes around 10 to 12 ride-sharing trips a day after work.


Even if the cost of basic necessities rises, it is manageable if people’s incomes rise. However, incomes have not shown proportionate growth. Even people with modest incomes face a dire situation.



Controlling global inflation has become a major challenge in recent years. In the event of a price increase on the worldwide market, not much can be done. If there is enough reserve, the exchange rate can be changed. The strain of inflation will be reduced. To reduce the pressure of inflation, measures should be adopted through a budget and monetary policy that are appropriate for the moment.

Due to growing inflation, many middle-class families are becoming the ‘new poor,’ according to experts who are concerned about their exclusion from the social safety net. As the Executive Chairman of the Power and Participation Research Centre (PPRC), Hossain Zillur Rahman recently told a national newspaper, “Inflationary pressure, particularly on poorer households, is more severe than what the official figure suggests.”

Due to the fact that earnings have not improved to keep up with such price increases, he said that this is plainly impacting the poor and even some middle-class individuals. He further commented, “The administration doesn’t seem to care about viewing this as a national issue; instead, it views it through a bureaucratic and ruling party lens. They are hesitant to collaborate with social actors in productive ways, especially when it comes to the difficult process of compiling a list of those who truly require assistance.” Experts have advised the government to involve the middle class in social safety net programs and create reliable lists of the needy in order to stop the issue from getting worse.


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