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Published : 20 Apr 2026, 02:07 AM
A sharp rise in fuel prices, particularly diesel, has triggered concerns over its impact on commodity prices, business activity and daily life, prompting calls for strict government monitoring to prevent excessive price hikes.
Following the increase driven by the ongoing Middle East conflict, analysts and business leaders say higher fuel costs will push up production and transport expenses, as well as public transport fares, potentially fuelling inflation that has already strained the economy and low-income households.
While experts are not questioning the rationale behind the government’s decision in the context of rising global energy prices, they remain divided over the scale of its impact.
One analyst said the diesel price hike would directly increase transport costs, which in turn would drive up commodity prices.
Another argued that prices of many goods had already risen citing various factors even before the war, leaving little justification for further increases now.
A third analyst described the government as being in a “compelled” position to raise prices, but urged strict oversight to ensure that the cost of goods and services does not rise disproportionately beyond the actual impact of fuel adjustments.
Consumer groups also voiced concern.
The Consumers Association of Bangladesh (CAB) said raising fuel prices at a time when people are still facing long waits at filling stations could encourage hoarding.
It described the decision to hike prices sharply as “self-defeating”.
Political parties, in separate statements, expressed “deep concern” over the decision and called for an immediate review. Some leaders also suggested exploring alternative energy sources.
Transport owners have already begun discussions with the government on revising fares.
A private sector employee Masum Billah criticised the move in a Facebook post, questioning whether previous fare and commodity price hikes were ever reversed when fuel prices stabilised.
On Saturday night, the government raised the prices of four types of fuel by Tk 15 to Tk 20 per litre, effective from midnight.
Diesel now costs Tk 115 per litre after a Tk 15 increase, octane Tk 140 after a Tk 20 hike, petrol Tk 135 after a Tk 19 rise, and kerosene Tk 130 after an Tk 18 increase.
The latest adjustment marks a more than 10 percent increase, reflecting the surge in global energy prices amid the Iran conflict.
Prices of jet fuel and furnace oil had already been raised in several phases since the start of the conflict.
‘How will Families Cope if Prices Rise Again?’
Abdul Jalil has been working as a security guard at a house in Mirpur for the past 11 years.
A resident of Barishal, he started the job on a monthly salary of Tk 7,000 to support his wife and two daughters; he now earns Tk 12,000.
But with inflation rising sharply, he says making ends meet has become increasingly difficult.
The latest hike in fuel prices has deepened his worries.
“The price of fuel has gone up so much, yet people still struggle to get it. Prices will rise further, and everything else will follow. How will I run my family on this salary?” he said.
He added that even with fewer dependents at home now -- having married off his elder daughter last November -- he remains anxious about the future.
His younger daughter is set to sit the SSC exams.
“If prices go up again, where will we go? Living in Dhaka is expensive. I’m even thinking of leaving the job, going back home and raising cattle with my Eid bonus and a loan. We can’t survive on this income,” he said.
Fruit trader Monir Zahid also fears the impact of rising fuel prices, though his situation is relatively less severe.
“Prices are still somewhat controlled, yet customers are not coming. When they hear the prices, they think everything has already gone up,” he said.
“The real impact of the price hike is yet to begin. If sales fall, I don’t know how I will manage my household.”
Government Acknowledges Wider Impact
State Minister for Power and Energy Iqbal Hassan Mahmood said the increase in fuel prices would inevitably affect overall living costs.
“A price hike always has a negative impact. This war has affected not just Bangladesh, but the entire world. We are also facing those consequences,” he told journalists at the Secretariat on Sunday.
He said the government had been compelled to raise prices due to higher import costs.
“We had no choice. Fuel is imported using foreign currency, and we have tried to keep prices at a tolerable level,” he said.
According to the minister, the revised rates have been set below the cost at which fuel was imported and stocked following the outbreak of the Middle East war.
The price hike comes as the government faces pressure to reduce subsidies in line with conditions set by the International Monetary Fund (IMF) for its loan programme.
Speaking to reporters after returning from the IMF-World Bank Spring Meetings in the United States, the finance minister said maintaining supply would be key to managing inflationary pressures.
“We have ensured adequate fuel stocks. If supply remains stable, the temporary price increase will interact with other factors,” he said.
“Fuel prices alone do not drive inflation. It is linked to multiple sectors.”
Will Inflation Rise?
Overall inflation eased to 8.71 percent in March, down from 9.13 percent a month earlier.
At that rate, goods or services that cost Tk 100 in March last year now require Tk 108.71.
Energy expert Prof M Tamim said a rise in fuel prices could push up the cost of essentials and fuel inflationary pressure.
He also warned of “disproportionate” increases in transport fares, urging stricter government oversight.
“The government must ensure fares do not rise beyond what is justified,” he said. “Diesel price hikes, more than octane or petrol, have a significant impact on inflation. Demand may not fall, but supply could tighten. Higher transport costs will raise prices across the board.”
However, former World Bank Dhaka office chief economist Zahid Hussain believes the latest hike may not significantly alter inflation.
“In my view, it may not make much difference, as the impact of higher global prices has already filtered into the domestic market, directly or indirectly,” he said.
He argued that subsidy benefits are not reaching farmers, questioning the rationale of continuing support for higher-income groups using octane for private vehicles.
Zahid also highlighted hidden costs not reflected in inflation data.
“Look at the queues at petrol pumps since the war began. People are spending five to ten hours waiting. That time has value, but it is not captured in inflation figures,” he said.
He added that diesel bought at official rates is often resold on the black market at higher prices, with reports of farmers paying Tk 125 to Tk 130 per litre.
“Is that reflected in inflation data? No. But farmers are paying that cost,” he said. “So who benefits? Those trading on the black market. They capture the subsidy.”
He also said despite recent adjustments, domestic price increases still fall short of global trends, even as subsidy costs rise and revenue remains constrained.
“In such a context, subsidising fuel for car owners and generator users among the upper and upper-middle classes is not justified -- even in better times, let alone now,” he said.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury said the inflationary impact of the price hike would depend on broader supply and demand dynamics.
“It may rise, or it may not. It depends on how the situation evolves,” he said.
Impact on Trade
Businesses across sectors say the fuel price hike will raise costs and add pressure to supply chains.
Former Bangladesh Garment Manufacturers and Exporters Association (BGMEA) director Mohiuddin Rubel told bdnews24.com the impact would be “universal”, including on garment exports.
“There is no doubt production costs will rise. Our factories rely on diesel, and fuel is also essential for transporting goods. So the impact is inevitable,” said the Denim Expert Ltd entrepreneur.
However, he noted that rising fuel prices are a global trend.
“It is not unique to Bangladesh. The entire apparel export chain will feel the impact. The key question is which country can manage it better. How Bangladesh responds will be crucial,” he said.
Mostofa Azad Chowdhury Babu, president of the Bangladesh Cold Storage Association, said the effect would be widespread.
“Our cold storages run on diesel-powered generators, so costs will increase. This will push up inflation and transport expenses,” the former senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said.
Referring to speculation about a possible electricity price hike, he added: “If power tariffs go up, the impact will naturally spread across the economy. Commodity prices will rise, and consumers will bear the burden.”
Expressing frustration over supply shortages, he said: “What is happening in the energy sector does not reflect good governance. Neighbouring India and even Pakistan do not face such shortages -- so why should we?”
He called for investment in private storage and refining capacity, along with faster policy decisions and improved revenue collection.
“The government should raise the revenue-to-GDP ratio to at least 15 percent and act quickly to address these issues,” he said.
Wholesale and retail traders also expect further price increases.
Karwan Bazar rice wholesaler Md Nuruzzaman said most husking mills depend on diesel, meaning higher production costs.
“This will increase the price of rice per sack, and the burden will ultimately fall on consumers. Fuel prices are linked to almost everything,” he said.
Faruk Hossain, a grocery trader at the seven-storey kitchen market, said higher transport costs would force retailers to raise prices.
“The pickup fares for bringing goods will go up. That means we will have to increase prices. In short, fuel price hikes affect everything,” he said.
CAB President AHM Shafiquzzaman described the decision to raise prices during a supply crunch as “self-defeating”.
“It will encourage hoarding in the open market. Transport and production costs will rise across sectors, and ultimately consumers will pay the price. Fuel prices influence everything,” he said.
Drawing a comparison with regional peers, Shafiquzzaman noted: “In Pakistan, the government lowered fuel prices to stabilise the economy. Here, the opposite is happening. That could mean further increases ahead as the government tries to manage the crisis.”
Calls for Strict Monitoring
Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), suggested that the government was "compelled" to adjust fuel prices due to the challenge of managing mounting costs.
"There is a rationale for this price adjustment, as the government has attempted to absorb the global price surge with its own funds for as long as possible," he said.
However, Moazzem expressed concern over the inclusion of diesel in the hike.
"We had hoped diesel would be exempted because of its direct role in public transport, power generation, and agriculture. By including diesel, the overall economic shock has been significantly amplified," he explained.
He further elaborated that because diesel is integral to irrigation, logistics, industrial production, and essential services like hospitals, the price hike will trigger a ripple effect across all sectors.
He urged the government to ensure that prices of goods and services do not rise “unreasonably” beyond the actual impact of fuel costs, calling for strict oversight.
“The government must be actively involved in price-setting processes. Without strong monitoring, the inflationary impact on consumers could exceed what is warranted,” he added.
