Biz-Econ

Dwindling income, hard times hit households

Khadija Akhter, who runs a small tea and grocery shop in Dhaka’s Rampura, used to comfortably support her family of five with her earnings. 

Now, she’s struggling. “People don’t have money,” she says, standing behind the counter of her modest shop. “They don’t drink tea like before, no one’s spending unnecessarily. The usual chatter at this intersection has stopped.”

Like Khadija, many small business owners and wage earners are feeling the pinch as the country’s economy continues to falter. 

The aftermath of political upheaval and the fall of the government on August 5 have left the economy teetering, with high inflation and stagnant employment opportunities squeezing the lower and middle classes.

Khadija explains that her income has plummeted in the last few months. "I used to take home Tk 15,000 to Tk 20,000 a month, sometimes more. But now, I’m borrowing just to keep things afloat,” she shares, pointing out that this month alone, she took a loan of Tk 5,000.

A country under economic strain

The student-led mass protests in June to August disrupted daily life and crippled many businesses. Two months after a new interim government took power, economic recovery remains elusive. 

Inflation continues to rise, and many people are still grappling with job losses. With incomes not keeping pace with soaring costs, purchasing power has sharply declined, pushing families to make tough choices.

Mojibur Rahman, a fruit vendor at Farmgate, shares a similar story. "The country is sick. Even fruit sales are down,” he laments. 

"I used to sell Tk 8,000 to Tk 10,000 worth of fruit a day; now I’m lucky to make Tk 3,000 or Tk 4,000. There are no events, no people moving around, and no customers,” he said.

Faisal Zahid, a senior sales representative, has also felt the impact. His monthly income of Tk 45,000, which once covered the education of his two children, rent, and food, is no longer enough. “My company’s sales have dropped due to the political situation, and I haven’t received any commission for three months,” he says. 

Faisal, the sole breadwinner for his family, is cutting back wherever he can. "I used to buy meat every week—now it’s once a month. And, Hilsa? Maybe once in the whole season."

Families like Faisal’s are feeling the pressure as they trim their budgets, cutting out essentials like milk and nutrition supplements. Even sending money to his parents in the village has stopped. “I’ve had to cut down on everything, but the expenses keep piling up.”

Businesses feeling the squeeze

Consumer goods companies, too, are reporting reduced sales. City Group, a major player in Bangladesh’s consumer goods market, has seen demand plummet. 

"While the country’s situation is improving, the business environment is still weak," says Biswajit Saha, a director at the company. "We’ve seen a big dip in product demand after the unrest and the recent floods."

He adds, “Consumers aren’t buying in bulk anymore. They’re only buying what’s necessary, and it’s halved our overall sales.”

Inflation pressures continue to mount

Inflation remains a significant burden for ordinary Bangladeshis. 

In September, overall inflation reached 9.92 per cent, and food inflation stayed above 10 per cent, although it was down slightly from August’s peak. 

Despite some government efforts to stabilise prices, the impact has been limited.

According to the Asian Development Bank (ADB), Bangladesh’s financial challenges are likely to worsen in the 2024-25 fiscal year, with inflation forecasted to hit 10.1 per cent. This figure is significantly higher than earlier projections, signaling that the economic difficulties are far from over.

Professor Barkat-e-Khuda, former chairman of the economics department at Dhaka University, underscores the urgency of the situation. “Inflation has been high for too long, and the real rate is likely even higher than reported. The government must find ways to reduce prices for daily essentials, especially for the lower and middle classes, who are bearing the brunt.”

Declining incomes, rising anxiety

Many workers are facing reduced incomes or losing their jobs entirely. The political unrest and production slowdowns following the change in government have left thousands of workers in fear of unemployment. Some beneficiaries of the previous government and political parties have also lost their income streams.

Mizanur Rahman, a professor of marketing at Dhaka University, highlights the fragile state of the economy. “There’s chaos everywhere, from workplaces to businesses. People are tightening their belts and waiting for stability to return.”

Retailers feel the pinch

Retailers across Dhaka are noticing a shift in consumer behaviour. Shoppers are cutting back on everything from groceries to cleaning supplies. 

Abu Hossain, a shopkeeper, explains that customers who used to buy full packets of milk are now purchasing just 200 or 400 grams. “People are even using detergent to clean their floors instead of floor cleaner,” he notes.

Jamal Hossain, who runs Bhai Bhai Store in Rampura, agrees. "People used to buy 5 to 10 kilograms of potatoes or onions. Now they’re buying just a kilo. That’s the reality we’re facing.”

Families forced to leave Dhaka

For some, the situation has become so dire that they’ve sent their families to live in villages, where the cost of living is lower. 

Badsha Hussain, who owns a furniture shop, had to make this difficult choice. "I had a big supply order for a government project, but it was canceled last month. It was a huge loss," he says. “People can barely afford to eat, let alone buy furniture. I sent my family back to the village last month."

As inflation continues to rise and incomes shrink, more families are cutting back on spending—and, for some, even leaving the city altogether seems like the only solution.