Excessive Price Volatility Indicator
This indicator was developed by the International Food Policy Research Institute (IFPRI) and the data collated on this website is available via www.foodsecurityportal.org.
The indicator provides a daily volatility status as well as a visual representation of historical periods of excessive global price volatility from 2000-present.
The FAO states that it is recognized that high food price volatility has a negative impact on food security. This volatility affects particularly the most vulnerable groups; smallholder/family agriculture and low income urban and rural populations. Although this indictor provides information on price fluctuations at the international exchange market, there is ample evidence that volatility transmits to domestic markets. Such transmission was exemplified during the 2007/08 food price crisis that affected several countries.
A more detailed description of how this risk indicator is calculated and assessed can be found under ‘methods’.
Excessive Price Volatility
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How to interpret this indicator?
- Visualizes the changes in price development on a selection of staple commodities.
- The indicator will issue a warning (the red shaded areas in the graph above) in the event of strong changes in price development.
- During these shaded periods, the specific commodity experiences excessive price variability (it is a volatile or quickly changing price development).
Advantages of this indicator?
- Timely, accurate and transparent market information is important for addressing food price volatility and achieving the ultimate goal of food security (especially among the poor in developing countries).
- It will help reduce inconsistent information on price variability on the global level by providing timely and transparent market information.
- Better and more precise information will enable policies to be devised that can mitigate the impacts of volatility on both producers and consumers (especially among the poor in developing countries).
Further advantages can be considered by reading IFPRI’s full press statement here.
What does this indicator capture?
- An early warning system to alert the world of price abnormalities for key commodities in the global agricultural markets.
- A mechanism currently available to identify timespans of increased price variability on international markets.
- Daily updates that forewarns policy-makers and humanitarian agencies about periods of time with excessive food price variability.