Nearly Half of Bangladesh Households Borrow as Living Costs Outrun Income

A Tk 1,798 gap puts household budgets under pressure

Nearly half of households in Bangladesh are borrowing to meet rising living expenses, according to the Bangladesh Bureau of Statistics (BBS), as average monthly spending exceeds income and families cut food purchases, postpone medical visits and use up savings.

The BBS Living Standard Survey puts average monthly household income at Tk 33,513 and expenditure at Tk 35,311. The difference, Tk 1,798, equals about 5.4% of average income. Some 47.42% of households reported borrowing to manage living costs.

Rural families face the widest exposure to debt: 51.91% are indebted, compared with 40.19% in urban areas and 32.11% in major city corporations. The rural rate is 11.72 percentage points above the urban rate, showing that the pressure extends well beyond expensive neighbourhoods in Dhaka.

Behind those figures are different routes into financial insecurity. A cleaner earning Tk 16,000 a month is skipping grocery purchases while repaying a migration loan. A family living on retirement funds and rental income is replacing old borrowing with new loans. A man earning more than Tk 100,000 a month is drawing down savings because of medical bills.

September 2026 figures from BBS help explain the squeeze. Consumer prices rose 8.34% from a year earlier, while the national wage growth rate was 7.9%. For workers whose earnings follow that pattern, pay buys less even after an increase.

Healthcare adds another layer of risk. A government study using 2022 household data found that direct medical payments pushed 10.8 million people below the poverty line, showing how illness can turn a tight budget into a lasting financial setback.

A cleaner cuts food while repaying a migration loan

Nurjahan Mina, 38, works as a city corporation cleaner and domestic worker. Her monthly income of Tk 16,000 must cover family needs alongside payments towards a Tk 100,000 loan taken from a landlord in Dhaka to help her son-in-law migrate abroad.

Mina says she contributes Tk 5,000 a month towards repayment. That alone absorbs 31.25% of her earnings. She describes the interest as Tk 100 per thousand, but the period covered by that charge is unspecified, so an annual interest rate cannot be calculated.

Mina described how she stretches the money left for food:

"I buy groceries one day and skip the next. On days I don't shop, I eat leftovers from the previous day or whatever food the households where I work give me," she said.

Her cooking costs have risen sharply. An LPG cylinder that previously cost Tk 1,550 now costs around Tk 2,400, she says, an increase of about 55%. Electricity for her room costs approximately Tk 1,000 a month.

Mina says her earnings from domestic work have stayed unchanged. She has no savings, tries to avoid medical treatment and borrows from relatives or acquaintances when an emergency makes treatment unavoidable. Her son earns money but, she says, does not contribute to rent or food.

An NGO loan is now under consideration to repay the existing debt. For Mina, that would change the lender while leaving future income committed to repayments.

Loan instalments squeeze a family with property income

Masuma Begum, 56, lives in Baridhara, Dhaka, with a family of five. Her household depends on her husband's retirement funds and rental income from residential and commercial properties in her home district.

A substantial bank loan places pressure on that income. Begum says the family has had to renew borrowing or take a new loan to repay an existing one, while substantial emergency savings are no longer available.

Begum described the strain of meeting the monthly bank payment:

"Our household income has not increased, but our expenses have. We are struggling to manage the monthly EMI on a large bank loan," she said.

An EMI is the scheduled monthly instalment on a loan. Begum's family must meet that payment alongside a flat service charge that has risen from Tk 4,200 to Tk 5,000, an increase of about 19%, and higher electricity bills.

Her home has a Titas gas connection but receives no gas, requiring the family to use LPG cylinders and an electric induction cooker. She says a cylinder previously costing Tk 1,700 now costs Tk 2,400 to Tk 2,500. When food becomes too expensive, the family stops buying particular items. Doctor visits are also kept to a minimum.

Healthcare consumes the room to save

Md Bashir, a name used to protect his identity, earns more than Tk 100,000 a month in Dhaka. At 45, he is supporting a household of three that includes his 78-year-old mother, whose medicines and treatment require regular spending.

Bashir and his wife are also undergoing infertility treatment. Together, their medical expenses reach Tk 40,000 to Tk 45,000 a month. They use hospitals in the middle price range rather than the most expensive facilities, but healthcare still leaves limited room for savings.

Bashir explained why he regards the treatment as essential:

"Some people may consider infertility treatment a luxury. But in our case, it is not a luxury; it is a necessity," he said.

He has switched from CNG transport to cheaper auto-rickshaws and is considering taking buses. Major expenses have required withdrawals from savings, and he says his income has failed to keep pace with inflation and has declined.

Bashir described the anxiety caused by having little protection against a large medical expense:

I am honestly one hospital bill away from bankruptcy," he said. "God forbid, if a large medical bill comes up for anyone in the family, I will be in trouble. This worry keeps me awake at night.

Mina, Begum and Bashir face different income constraints, but medical care is a pressure point for all three. Mina borrows during emergencies, Begum limits consultations, and Bashir spends heavily while fearing the next bill.

Medical payments pushed 10.8 million into poverty

The Health Economics Unit's study, Financial Risk Associated with Out-of-Pocket Healthcare Payments and Benefit Incidence in Bangladesh, gives a national measure of that vulnerability. Conducted with support from the World Health Organization and the Swedish Embassy, it analysed Household Income and Expenditure Survey rounds from 2005, 2010, 2016 and 2022.

Direct household payments for healthcare pushed 10.8 million people, or 6.4% of the population, below the poverty line in 2022. In 2005, the corresponding figures were 5.6 million and 3.9%. Over the same period, the national poverty rate fell from 40% to 18.7%.

Those payments include medicines, diagnostic tests, consultations and treatment paid for by families themselves. Average monthly household payments, adjusted for inflation, increased from Tk 1,241 in 2005 to Tk 3,238 in 2022, about 2.6 times the earlier amount. The share of households reporting any such payment rose from 52.5% to 92.7%.

The study measures financial hardship when healthcare payments exceed 40% of the money left after basic needs are met. By that measure, 41.7% of people faced hardship in 2022, up from 28.2% in 2005 and above the global estimate of 26% for 2022.

Rural and poorer families face the greatest medical strain

People in the poorest fifth of the consumption distribution faced especially severe pressure. In 2022, 90.8% experienced financial hardship from healthcare payments, compared with 13.6% in the richest fifth. The groups are ranked by consumption, meaning the goods and services people use, rather than by salary alone.

Rural hardship reached 47.9%, compared with 28.2% in urban areas. Barishal moved from the lowest rate among divisions in 2005, at 22.5%, to the highest in 2022, at 59.1%.

Subrata Paul, the Health Economics Unit's focal point for Universal Health Coverage and National Health Accounts, described who bore the heaviest burden:

"The poorest households were the worst sufferers," he said.

Patterns of care also changed. Pharmacies accounted for 55.4% of outpatient care in 2022, up from 32.5% in 2016. Public facilities remained the main provider of inpatient care, but their share fell from 61.3% to 56%, while the private share rose from 36.9% to 42.5%.

The study also tracked catastrophic health expenditure, defined as direct medical payments exceeding 10% of total household consumption. Its incidence rose from 12.5% in 2005 to 32.1% in 2022. That measure uses the entire consumption budget; the financial hardship measure focuses on money remaining after basic needs.

The Health Economics Unit recommended more public financing, fairer distribution of healthcare benefits, reliable free essential medicines and diagnostics, and affordable continuing care for chronic conditions. These measures target costs families repeatedly face, rather than leaving them to seek a new loan each time someone becomes ill.

Credit fills the days before payday

Anas Ahmed, an employee at a private company, earns Tk 54,000 a month. Rent takes Tk 20,000, utilities another Tk 5,000, and instalments on an iPhone purchased six months earlier require Tk 5,500.

Motorcycle fuel and commuting cost Tk 7,000 to Tk 8,000, while groceries take Tk 5,000 to Tk 7,000. Together, those listed expenses total Tk 42,500 to Tk 45,500, leaving Tk 8,500 to Tk 11,500 for other family needs, savings and unexpected costs.

Ahmed tries to save Tk 5,000 monthly but often spends it on routine needs. Sometimes his money runs out before the 25th. He then borrows Tk 5,000 to Tk 10,000 through mobile financial services, with interest and repayment over three months. Paying those loans from the next salary reduces the money available for the next month's expenses.

Sumia Zahid, a 29-year-old university teacher, uses a credit card for purchases and travel and repays it monthly. She says earnings have not grown enough to match inflation, leaving little capacity to save.

Zahid described bank credit as another form of borrowing:

"Even though I don't borrow from friends, family or relatives, I am borrowing from the bank and repaying it every month through my credit card. That is debt too," she said.

Transport costs also weigh on students. Private university student Abdullah Al Mahmud spends at least Tk 200 daily on motorcycle fuel, compared with Tk 240 for a return metro journey. Small differences in daily spending matter when families are already funding education and living costs from strained incomes.

Prices keep rising faster than wages

BBS recorded headline inflation of 8.34% in September 2026, up from 8.26% in August. Food inflation increased from 7.02% to 7.22%, while inflation for items other than food eased slightly from 9.32% to 9.3%.

The national wage growth rate of 7.9% in September was 0.44 percentage points below headline inflation. Actual household experiences vary with pay increases and spending patterns, but the national figures show wages struggling to match price growth.

Average inflation over the 12 months to September was 8.65%, down from 9.45% in the preceding 12 months. Prices were still increasing, just at a slower average pace. Families therefore continued paying more for goods and services even as the inflation rate eased.

The main dates behind the household and healthcare pressures are:

• 2005: Direct healthcare payments pushed 5.6 million people below the poverty line, and 28.2% experienced healthcare financial hardship.
• 2016 to 2022: Pharmacies gained a larger share of outpatient care, while the public share of inpatient care declined.
• 2022: Medical payments pushed 10.8 million people into poverty, and healthcare financial hardship reached 41.7%.
• September 2026: Consumer inflation reached 8.34%, compared with wage growth of 7.9%.
• October 2026: The IMF's Asia and Pacific economic assessment put unemployment among highly educated young people in Bangladesh at about 29%.

Why budgeting alone has limited reach

Major metropolitan households spend an average of Tk 46,778 a month, with essentials other than food accounting for approximately 56.7% of budgets. Rent, transport, healthcare and education therefore leave limited room for adjustments at the grocery stall alone.

Mahtab Uddin, an assistant professor of economics at the University of Dhaka and honorary research director at the South Asian Network on Economic Modeling, links inflation pressure to monetary policy that was insufficiently restrictive or timely, continued liquidity support to troubled banks and expansionary fiscal policy. Monetary policy influences borrowing conditions and money in circulation; fiscal policy concerns government spending and revenue.

Uddin also points to weak tax collection, large development spending and limited worker bargaining power. When many people compete for too few jobs, employees have less room to negotiate pay that matches living costs. The IMF's October 2026 assessment also warned that artificial intelligence could place pressure equivalent to 2% of total labour demand in Bangladesh.

Other named observers identify costs along the supply chain. Former National Board of Revenue chairman Badiur Rahman cites market syndicates and extortion. Jahangirnagar University professor Anu Muhammad links higher essential prices to recent gas and electricity price increases. Former caretaker government adviser Hossain Zillur Rahman warns of acute hardship if prices are not restrained.

Dhaka journalist Mumitul Mimma found that recording everything from transport fares to tea purchases helped identify where money went and made planning easier. For households whose income is already committed to food, rent, medicines and repayments, however, record keeping leaves the central shortage of income unresolved.

The household experiences show what relief would need to reach: affordable essentials, dependable earnings and medical care that does not exhaust savings. Mina needs room to buy food without new borrowing; Begum needs income left after instalments; Bashir needs protection against a major treatment bill.

Key Points

• BBS says 47.42% of households borrowed to meet rising living expenses.
• Average monthly spending of Tk 35,311 exceeds average income of Tk 33,513 by Tk 1,798.
• Rural household indebtedness stands at 51.91%, compared with 40.19% in urban areas.
• September 2026 inflation was 8.34%, above national wage growth of 7.9%.
• A government study found that direct healthcare payments pushed 10.8 million people below the poverty line in 2022.
• Families describe cutting food purchases, limiting doctor visits, spending savings and replacing existing debt with new loans.