Bangladesh fuel prices rise 17.4% as import costs bite hard

Bangladesh fuel prices rose by up to 17.4% from Monday, adding transport and factory costs to an economy already short of energy.

The Energy Ministry said the increase was needed after international fuel prices more than doubled since March 2026 and freight costs climbed following instability linked to the Middle East conflict. The move follows earlier price increases in April and June, when the government also cited higher import costs.

Diesel reaches 135 taka

Diesel rose 17.4% to 135 taka ($1.11) per liter from 115 taka, according to the ministry. The new schedule also lifted 95-octane gasoline to 165 taka per liter from 145 taka, petrol to 160 taka from 140 taka and kerosene to 155 taka from 135 taka.

The adjustment lands in an import-dependent economy where fuel prices feed quickly into freight, farming, power generation and factory operating costs. With the exchange rate cited at 122.1000 taka per dollar, the dollar cost of imported energy remains central to the government’s subsidy bill and reserve management.

BPC losses hit 228.76 billion taka

The ministry said state-owned Bangladesh Petroleum Corporation incurred losses of 228.76 billion taka ($1.9 billion) between March and August. It said the latest increase could reduce annual losses by about 100 billion taka, while conserving foreign exchange reserves and limiting fuel smuggling to neighboring countries where prices are higher.

The government also pointed to continuing subsidies for liquefied natural gas, electricity and gas supplies. That support has become more costly as the regional energy market tightens and shipping expenses add to import bills, according to the ministry’s statement.

Garment exporters face new costs

Exporters said the price rise would hit manufacturers already dealing with power and gas shortages. Bangladesh’s garment sector is exposed because delivery speed and production costs influence orders from global retailers, including brands supplied by Denim Expert Ltd.

Mohiuddin Rubel, additional managing director of Denim Expert Ltd, said fuel, gas and power costs all affect whether suppliers can remain competitive on price and delivery time. His comments point to a direct channel from pump prices to export margins: higher transport and production costs can narrow the room factories have to meet buyers’ terms.

"The fuel price hike will hurt everyone, from common people to businesses and industries," said Anwar-ul Alam Chowdhury, president of the Bangladesh Chamber of Industries. Chowdhury, who is also chairman of garment exporter Evince Group, said higher fuel costs would add pressure on manufacturers already facing energy shortages and thin margins.

Three paths for fuel bills

If global oil and freight costs remain elevated, the government’s price increase may slow BPC’s losses but pass more costs through to consumers and producers. In that case, the macro effect would be firmer inflation pressure, BPC would get budget relief, and fuel-intensive sectors would face tighter margins.

If oil prices ease or shipping costs normalize, Bangladesh would have more room to slow further pump-price increases while protecting reserves. That path would reduce pressure on BPC’s import bill and give garment exporters, transport operators and small manufacturers more space to absorb recent cost increases.

If energy shortages persist alongside higher pump prices, the burden would shift from prices alone to output and employment. The open question is whether fuel supply, gas availability and import financing improve fast enough to prevent higher costs from becoming a broader constraint on production.