Soon after the introduction of the policy, some monetary economists had pointed out the flaws in the argument for a restrictive policy based on the assumption of excessive demand, when the inflation was actually caused by rising costs. A demand-driven inflation could be, relatively painlessly, arrested by a tight monetary policy that works on the economy by reducing aggregate demand.

But if the inflation is caused by rising costs the same policy could be counterproductive, and will have some harsh effects especially on the marginal groups. Much caution is needed in wielding monetary instruments to dampen a cost-push inflationary impulse. The finance minister has, belatedly, corrected the position of his ministry regarding inflation. (Bangladesh Bank seems to have also shifted its position in its second Monetary Policy Statement.)

This is a very satisfying outcome since it clearly shows the benefits of interfacing of transparent policy-making and public discourse. The nation could be spared much loss if all sectors were to be as transparent and interactive in policy formulation.

The minister, however, has a different theory about the factors behind the cost-push. The above-mentioned economists had implicitly taken the cost-push to be due to natural causes such as floods, and the worldwide price increase of many essential items including rice, wheat, sugar and fuel oil. They had, thus, assumed cost-push to be a natural market development.

The minister, on the other hand, blamed some shadowy syndicate of unscrupulous businessmen for the recent price hike. This fundamentally alters the previous cost-push argument. If the inflation is due to natural cost-push factors, the government cannot do a great deal except try to moderate its impact, especially on vulnerable groups (just as the government cannot do much when a cyclone/flood hits except move the vulnerable people to safer sites).

But if the cost-push is engineered by some unholy syndicate, the nature of the response must change substantially. The government cannot absolve itself simply by making a wild allegation. Although I have some reservations about the syndicate theory (it is rather facile), I am willing to accept it since so many ministers and other important people, who have much better access to information, are repeatedly advancing it.

What baffles me, though, is why these eminent people are so reluctant to give the public any shred of evidence that would unequivocally establish a syndicate machination. Does the evidence exist at all, and if so, is it too hot to make public?

If the cost-push is not a natural market development, but rather an artificial market manipulation, the responsibility lies squarely on the shoulders of the government to go after the market manipulators to correct the situation. As the senior-most, and most influential, minister of the cabinet the lion's share of this responsibility falls on the broad shoulders of the finance minister.

Passing the buck on to an inexperienced minister, who has virtually no effective instruments to control prices (he must have figured it out by this time), will not wash with the public. Too many people are smarting under the unrelenting pressure of high prices and they demand a reprieve. It's a collective responsibility and the entire government is accountable.

Failure to neutralize the manipulative power of the alleged syndicate can only strengthen the conviction already held by a large section of the suffering public that important government functionaries are in cahoots with the syndicate to make a quick buck at their expense.

This conviction is further strengthened by the stiff resistance of the government to enacting a consumer protection law or a competition law. At the moment there is little legal protection of the consumers against unfair business practices. There are also no effective legal restrictions on the formation of syndicates to manipulate markets or prices.

A consumer protection law empowers consumers to seek legal redress for any perceived business malpractices that harm them. It would also offer legal protection to honest business people against unfair competition from dishonest business people. A competition law would have given the government an instrument to prevent the formation of syndicates, thereby eliminating the possibility of market manipulation. Such a possibility increases as the economy grows more productive and diversified.

There is overwhelming support for a consumer protection law from both, the general public and the honest business community. Yet the popularly elected government has, so far, not given any reason to the electorate why it is holding up the draft consumer protection law (prepared by the Ministry of Commerce) that has gone through all bureaucratic vetting during the last four years.

The commerce minister's recent statement that the coalition will enact the law if it was reelected did not amuse anyone. The coalition still has time to pass the law, and it should do so forthwith to salvage some credibility. They will need it for the next election.

The author is Professor of the Department of Economics, University of Dhaka.