Price Transmission Indicator
The Price Transmission Indicator measures how international price movements are transmitted to local markets. It indicates in which countries we expect prices to rise if global prices rise. Prices in most countries respond to global price movements but the extent of this greatly depends on the country, the crop and the nature of the price change at the international level.
A more detailed description of how this risk indicator is calculated and assessed can be found under ‘methods’.
Select a Crop
Select Time Range
Select specific Date
How to interpret this indicator?
- When the indicator is green – no food insecurity concerns in the specific country and for the chosen crop.
- When the indicator turns amber – the increase in the global price leads to a considerable increase in the local price (thus making it difficult for vulnerable groups to buy the food item).
- When the indicator turns red – the global price change affects domestic prices to such an extent that it can lead to food insecurity.
- Can only reveal if the change in global prices leads to a significant change in domestic prices.
- The aggregated map reflects the worse status of a country in any four commodities.
Advantages of this indicator?
- Because domestic prices usually react to global price changes with a small time lag, this indicator can forecast local price movements which are yet to happen.
- Opportunity for policy-makers and NGOs to take a country into focus before a crisis.
- Depending on the relevance of the specific food item in the national household consumption, the indicator reveals the dependence of a country to global markets.
What can this indicator capture?
- Global food shortages that are transmitted to local markets (depending on the global market integration of the respective country).
- Countries that are or are not vulnerable to global food price shocks.
- Local effects on price change (such as war, harvest failure, drought, flooding etc.) are not reflected as long as they do not significantly affect the global price.
- This indicator does not, however, account for substitution effects in domestic consumption. If the price transmission indicates high risk for rice in a country where wheat is predominately consumed, there is no real food insecurity as wheat is available at the usual market prices. However, price increases in one commodity can often lead to shifts in demand for another commodity, thus increasing prices. These effects are not captured on a local but on a global scale.