Headlines
Inflation reaccelerates to its highest in 16 months as the budget debates tariff relief.
Food's Share of Spending Rises as Income Falls
An IMF chart, built on USDA data, plots food spending as a share of GDP against food's share of total consumer spending. Poorer economies sit further up and further right on both scales.
- ▸Advanced economies hold the bottom-left corner. Food takes roughly 5 to 22 percent of consumer spending in that group, on food outlays worth under about 13 percent of GDP.
- ▸Emerging markets spread across the whole middle of the chart. Their markers run from about 11 percent of consumer spending to above 40 percent, and the group overlaps the advanced cluster at one end and the low-income band at the other.
- ▸Low-income developing countries occupy the top-right. Every marker in that group sits above roughly 29 percent of consumer spending, and the highest of them approach 55 percent.
A household that already spends half its money on food has no cheaper category to move into, so a price rise comes out of everything else it buys. The IMF places Bangladesh in the low-income group at the upper right of this chart. Food and beverages carry the largest single weight in the Bangladesh CPI basket, which is the same fact seen from the other side.
Food inflation belongs in the credit process, not only in the macro commentary. A price move reaches disposable income before it reaches any borrower's file, and the thinnest-buffer books — retail, microfinance-linked exposure, small-ticket SME — feel it first. A risk team reading food prices only off the monthly CPI print is working from the slowest signal available.
Policy & Rates (Bangladesh Bank)
Rate holds 10%; May CPI 9.42% strips the easing optionality bare.
FX Reserves
WATCH
- ◆Next MPS stance now that May CPI printed 9.42%
- ◆FY27 budget deficit-financing mix — session live
- ◆1 Apr reserves refresh — print still lagging
RISK
- ▼May CPI 9.42% revives cost-push, thins the +0.58% real cushion
- ▼Power-tariff hike compounds the inflation pass-through
- ▼Reserves print lagging — last refreshed 1 Apr
Banking
On the Mar print, NPL holds 32.26%; default risk clusters in 15 banks.
WATCH
- ◆Bank-level Q1 2026 disclosures — due June
- ◆Whether write-offs or recovery drove the 347bp drop
- ◆TDS-on-deposit changes in the FY27 budget
RISK
- ▼CAR still 844bp below floor — solvency hole unchanged on the Sep read
- ▼Default concentration: 85% in 15 names is idiosyncratic tail risk
- ▼Sovereign crowding as govt bank borrowing runs to BDT 1.25tn
The capital arithmetic has not moved, and the new disclosure sharpens where the hole sits. NPL holds 32.26% on the Mar 2026 print — down 347bp off 35.73% — yet CAR stays 1.56% on the Sep 2025 read, 844bp below the 10% floor: the bad-loan share fell, solvency did not. That 85% of default loans cluster in just 15 banks confirms a name problem, not a system average; the 347bp drop reads as write-off and reclassification, not borrowers curing. The fiscal channel works against repair — govt bank borrowing has run to BDT 1.25tn, past the FY26 ceiling, pulling funding toward the sovereign and away from private credit already at 6.03% YoY. With May CPI back at 9.42%, the rate relief that could have eased debt-service is off the table. The desk holds no fresh state-lender or stressed-private exposure and treats the bank-level Q1 disclosures, due June, as the only print separating write-off from recovery.
FX & External
Peg holds 122.75; remittance $3.13bn covers the $2.26bn gap into the dip.
External Flow Balance
USD/BDT flat at 122.75; remittance $3.13bn covers the $2.26bn trade gap as May exports hold at $3.12bn, down 7% YoY.
USD/BDT unmoved since the April band reset; reserves and the May export print are the freshest reads.
Treasury: remittance still funds the gap, but May exports -7% and the June–July dip are fresh drains — watch import-payment timing.
WATCH
- ◆June–July seasonal remittance dip on reserve cover
- ◆Brent pass-through into post-Eid import-payment lines
- ◆IMF programme size and conditionality timeline
RISK
- ▼May exports -7% narrows the surplus cushion
- ▼Power-tariff hike and 9.42% CPI widen the import bill
DSE Markets
Board holds the 5,475 high on BDT 1,352cr; May CPI 9.42% bites the fuel.
DSEX Index
DSEX holds 5,475.00 on turnover BDT 1,352cr, breadth 242/104, DS30 at 2,068 — the breakout base unbroken above 5,441.
Above last Thursday's 5,441.66 high; turnover held above BDT 900cr for a fifth straight session.
Risk/equity desk: hold the base while turnover stays above BDT 900cr — but May CPI 9.42% threatens the rate-cut fuel; trim into strength.
WATCH
- ◆Whether turnover holds above BDT 900cr to sustain the base
- ◆Front-end T-Bill cut-offs at the next auction after May CPI 9.42%
- ◆Consumer counters against the confirmed power-tariff hike
RISK
- ▼May CPI 9.42% forces a front-end re-steepen, reversing the discount-rate tailwind
- ▼Budget-session supply or a fresh tax surprise hits sentiment
- ▼A flat curve caps the bank-counter re-rating
The breakout is intact, but its fuel just took a hit. DSEX holds 5,475.00 on turnover of BDT 1,352cr, breadth 242/104 — the base built last week is unbroken, money has not left the board. The rally was a rates trade: a steady, lower front-end (91d T-Bill 10.15%, the 5y–10y flat at 10.91%) cut the discount on equity cash-flows while deposits paid less, and cheap short money rotated in. May inflation at 9.42% — highest in 16 months — is the first crack: it drags the real policy rate to +0.58% from +1.29% and shuts the door on the cut the board had begun to price. If the front-end re-steepens to defend the real rate, the discount-rate tailwind reverses. The budget session is the second risk — any financing-mix or tax surprise in the FY27 statement. The desk stays constructive while turnover holds above BDT 900cr, but trims into strength and reads the next T-Bill auction cut-off as the tell.
T-Bonds & T-Bills
Front-end steady at 10.15%; the 9.42% CPI print is the re-steepening risk.
BD Govt Yield Ladder
91d T-Bill held 10.15%, 364d 10.50%; the curve runs near-flat through 10y at 10.91%, the 5y–10y spread just 13bp.
Short-end stepped lower since late April — 91d off 10.17%, 364d off 10.65%; the curve flat for an eighth read.
ALCO: the flat front-end still supports roll-down — but May CPI 9.42% raises re-steepening risk; watch the next auction cut-off.
WATCH
- ◆Next auction cut-offs after the 9.42% May CPI
- ◆Govt bank-borrowing pace into the FY27 budget — BDT 1.25tn
- ◆5y–10y spread for any re-steepening
RISK
- ▼May CPI 9.42% forces a front-end re-steepen
- ▼Fiscal crowding as borrowing runs to BDT 1.25tn
- ▼Flat curve compresses NIM on ALM books
Macro & Inflation
On the Mar print, 12m-avg held 8.6%; May inflation just reaccelerated to 9.42%.
CPI Trend
CPI 12m-avg held 8.6% on the Mar print, food 8.24%, non-food 9.09% — but May point-to-point inflation jumped to 9.42%, reversing the glide.
Mar 12m-avg at lowest since Mar 2023 (8.4% then); the May reacceleration breaks a multi-month easing run.
MPC: May CPI 9.42% with policy at 10% leaves the real rate near +0.58% — expect a hold, not the cut equities priced.
WATCH
- ◆Apr–May CPI components from BBS for the tariff pass-through
- ◆Whether Brent's slide to $93 caps the next print
- ◆Private-credit trajectory — 6.03% YoY still subdued
RISK
- ▼May CPI 9.42% revives cost-push, kills the easing case
- ▼Power-tariff hike compounds the non-food leg above 9%
- ▼Real rate toward +0.58% squeezes the policy cushion
The disinflation story just broke. On the Mar print the 12m-avg sat at 8.6% — lowest since Mar 2023 (8.4% then) — and food had cooled to 8.24%, a glide the desk priced as room for the MPC to ease. The May point-to-point print at 9.42%, highest in 16 months, reverses that: with food and non-food both surging, the headline is back near the cycle's worst and the real policy rate — 10% policy less the May print — collapses to +0.58% from +1.29%. That is the hinge for the book. The cut the DSEX breakout had begun to price is off the table; the front-end at 10.15% now looks too low to defend the real rate, and a re-steepening pulls the discount-rate prop from equities while compressing NIM on ALM (Asset-Liability Management) books. Brent's slide to $93.09 is the only offset; a confirmed power-tariff hike works the other way. The desk reads the next BBS components as the decider on spike-versus-trend.
Remittance
Remittance holds $3.13bn, covering the trade gap; the June–July dip the watch.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆May remittance print confirmation from BB
- ◆Gulf labour-policy shifts affecting worker headcount
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold holds $4,337/oz; LNG $15/MMBtu on the Apr print — monsoon the watch.
WATCH
- ◆LNG spot for Jun–Aug monsoon-demand pricing
- ◆Gold as a global risk-sentiment proxy
RISK
- ▼LNG spike on monsoon power demand lifts Petrobangla off-take costs
- ▼Gold reversal signals risk-on rotation
Fiscal
Budget session live; bank borrowing past ceiling as tariff and source-tax cuts loom.
NBR Tax Revenue
WATCH
- ◆FY27 deficit-financing mix — tabled this week
- ◆NBR collection pace against the full-year target
- ◆Source-tax 5% to 4% and 250-line tariff cuts — the revenue offset
RISK
- ▼Private-credit crowding-out as the sovereign competes for bank funding
- ▼Borrowing past ceiling pressures the T-Bill curve into FY27
Iran War & Oil
Brent holds $93.09 near the $90 line; the oil relief barely dents 9.42% CPI.
Brent Crude
Brent holds $93.09, WTI $90.54 — about $18 below the May $111 peak, the mid-$90s given way toward the $90 line.
Down from Friday's $95.21; the May $111 peak still ~$18 above spot.
Treasury: the oil relief trims the dollar fuel bill but barely dents 9.42% May CPI — watch a $90 break or a $95 retest.
WATCH
- ◆A $90 break versus a $95 retest as the next thresholds
- ◆Oil pass-through into the June BBS CPI components
- ◆OPEC+ June production decision
RISK
- ▼Renewed supply premium if the ceasefire frays
- ▼Domestic tariff hike and 9.42% CPI swamp the oil relief
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