Over the last three months the CTG has taken various initiatives to control the spiraling prices of basic food items, all of which have failed due to the flaw in understanding the reasons behind the inflationary pressure.

The CTG is yet to recognize that we are at the peak of a global inflation. From neighbouring India to the United States, inflation, particularly in food items where certain commodities prices have risen 30% to 200% over the last 2 years, is also a major concern. The global commodity index is at all-time high. Add to that the price of energy, and you get the picture.

In many instances, demand for certain food products used in non-food industry has resulted in higher cost of production for the food processors. For example, demand and the price of corn has grown sharply over the last few years as it is used as a raw material for ethanol (a petroleum substitute).

The syrup made from corn, on the other hand, is also a major ingredient in many western food products from tomato ketchup to soft drinks. The producers of corn based food items are having to buy their corn at very high prices and pass the cost to the consumer. Fortunately, Bangladesh is not a corn consuming nation, but we have a similar problem as the consumers are hit with the additional cost of production passed on by the producers.

Food producers in Bangladesh have long been practicing dodging taxes and using adulterated ingredients to be "competitive." The recent drive against such practices has resulted in higher cost of production which is passed on the consumer. However, this is a short term implication and the consumers will benefit in the long-run if this drive against ghoosh and bhejal continues.

We must realize the lag between the time when such measures are taken and the effect on income. It will be between 12 months to 24 months for income to catch-up with inflation. At the same time the government will also realize higher revenue that should be invested in infrastructure to transport, store, and preserve food commodities.

On the legal side, emphasis should be placed on anti-trust laws to stimulate competitiveness. This should be applicable to all industries not just FMCG (Fast Moving Consumer Goods) as monopolies and oligopolies control many sectors of our economy. Laws against stockpiling are a good idea but difficult to draft. We must also explore the possibility of setting minimum wage. A standard minimum wage may not be suitable for a country like Bangladesh, and therefore an alternative approach could be setting industry specific minimum wage which will vary from industry to industry.

There is no organized commodities exchange in Bangladesh, and as a result commodities trading is not transparent and open. A commodities exchange will bring more market players in the scene and give clear indication as to the direction of future/forward prices.

Government could be more effective by intervening in the exchange as a player (through Trading Corporation of Bangladesh or TCB) instead of setting up "open-market" shops by border patrols for retail consumers. I do appreciate the hard work they have been doing, but we should also recognize that their job is to guard our borders not act as shopkeepers.

Technology can also play a part in bringing about efficiency in production and forecasting weather patterns. Bangladesh Krishi Bank (BKB) should take initiatives to make capital equipment available to farmers in liberal terms. They can tie-up with NGOs to train and educate the farmers about the benefits of technology. Weather plays a major role in farming, and therefore significant resources need to be deployed in the forecasting of weather patterns and their effects on farming.

There is no short-term formula to control the prices of commodities. It is demand and supply that makes a market price, and attempts to control market price will not last or succeed if demand and supply is not taken into consideration as the major force behind price fluctuations.

The best way to tackle rising prices is to improve efficiency in the production, transportation, and storage of food products and by setting up a commodities exchange where trading is transparent and open. Supplement that with anti-trust and minimum-wage legislations, and you have the "magic formula."

The writer is an economist and financial markets professional.