Price Observatory

The price observatory is an entity, usually of a political nature, that tries to provide knowledge about the circumstances that explain the formation, and fluctuation, of prices. Typically commodities.

Price Observatory

The price observatory, therefore, tries to improve the existing knowledge about how prices are formed, as well as the explanatory factors that determine said formation.

Through this body, a control is carried out, and a follow-up is carried out, of prices and their evolution. Through this observatory, the aim is to also favor the transparency and rationality of the commercialization of products. Always trying to control price stability, as well as improving competition for the benefit of consumers.

The price observatory is usually a government entity.

Through this, also, the improvement of marketing processes is studied.

Functions of a price observatory

Among the functions that a price observatory presents, the following should be highlighted:

  • Obtain and generate information regularly. Which allows to establish a systematic monitoring of the formation of final food prices.
  • Analyze the basic structure of prices, as well as the factors that cause their evolution.
  • Carry out reports and studies on possible imbalances. Also, prepare the reports on food prices that any political figure demands, when they are part of the government.
  • Encourage dialogue between the representatives of the productive sector, commercial distribution and consumers, among themselves and between them and the Public Administrations.
  • Prepare action proposals to guarantee rationality and competition, as we said, in favor of the consumer.

Structure of the price observatory

The structure of a price observatory may vary. Depending on whether it is a public or private entity, it may have a different structure. In the same way that, being a public entity, depending on the country, it could also suffer variations.

For this, we have selected, as an example, the price observatory of the Government of Spain. A public entity that belongs to the Ministry of Agriculture, Fisheries and Food.

In this sense, the structure presented by said observatory is as follows:

  • General State Administration.
  • Autonomous and local administrations.
  • On the other hand, companies and sectors of the production, transformation and distribution of food and consumers, through their officially recognized organizations.

If the price observatory is a private entity, it may, in accordance with its statutes, present the structure that said body considers.

Advantages of having a price observatory

Among the advantages of a price observatory, the following should be highlighted:

  • Improves information on price formation.
  • It allows governments to monitor price developments.
  • It allows knowing imbalances that may occur in the market.
  • It helps consumers to promote their well-being.
  • It allows greater coordination between the agents that participate in the production and marketing process.
  • It allows for analysis with greater objectivity and economic rigor.

These, among many others, would be some of the advantages mentioned. Although it should be added that, if it is a public entity, said observatory should not be used as an instrument of political strategy.