Market monitoring is the process of regularly collecting information from markets to inform programmatic decision-making. It is crucial not only for market-based programming but for any humanitarian or development intervention with the potential to affect local market actors and prices. This includes any program involving resource transfers or procurement, including, but not limited to, cash and voucher assistance (CVA) programs.
The most basic form of market monitoring is simply to track the prices of standardized units of key commodities over time. This can help humanitarian and development actors fluidly adapt their interventions in response to price changes, as well as understand whether their own programming might be harming local markets by driving prices up or down.
However, it is nearly always advisable to dig deeper. Wherever possible, additional indicators should be included to monitor aspects of market functionality and accessibility, as well as available stocks and supply chain resilience for key market commodities. Tracking changes in these key indicators enables practitioners to better understand why changes in market prices might be happening, how to adapt programs to these changes, and whether the situation might require market-strengthening interventions.
Market monitoring should be conducted regularly to be effective. The ideal interval between rounds might be anywhere from weekly to quarterly depending on the expected volatility of local prices under current conditions. Different intervals can even be used to monitor different items: for example, if water prices tend to be much more stable than fuel prices, they may not need to be monitored as often.
Irregular market monitoring conducted only in response to acute shocks should be avoided, as it limits one’s ability to understand whether observed changes have occurred due to the shock or to larger macroeconomic trends.
BEST PRACTICES:
Market monitoring, results measurement and adaptive management
Market monitoring should be part of the results measurement framework for any program – in any sector – that regularly provides goods and/or services, regardless of the modality used. Market monitoring helps to:
Determine whether the value and level of assistance originally calculated is still adequate
Verify whether the original aid modalities and delivery mechanisms are still appropriate
Track whether existing programs are causing harm to local markets (e.g. surpassing the available supply, driving up prices, creating monopolies, etc.)
The scope of a market monitoring effort, including the commodities monitored, should adapt to the local context and the programs being informed. In the case of humanitarian multi-purpose cash (MPC), for instance, monitored items are often drawn from an existing national or regional Minimum Expenditure Basket (MEB) and reflect the items most often purchased by vulnerable households.
In stable situations or protracted crises, it likely makes sense to monitor all items in the MEB, or an equivalent basket, and to track its full cost over time. This enables practitioners to better understand the full scope of the financial burdens faced by targeted households, crucial for any intervention that seeks to fill the gap between household expenditures and resources. In economically volatile contexts, though, this may not be feasible, and actors may consider monitoring only a few proxy items to ensure more rapid data collection and a shorter interval between rounds.
Those designing market monitoring systems should understand how indicators for market prices, stock levels, and market functionality can work together and affect each other, and should implement a clear system of red flag alerts and triggers for action. For example, if transporters begin to face great difficulty accessing markets due to a conflict event, humanitarian actors should expect imminent shortages and might opt to preposition goods to ensure continuity of in-kind distributions.
Best Practices: Collaboration and data sharing
Market monitoring data is consistently needed to assess program quality across many different types of humanitarian and development interventions. It is often requested at the proposal stage as baseline data by donors seeking to evaluate the effectiveness of the market-based programming they fund.
Where possible, humanitarian and development actors should consider making their anonymized market monitoring data, questionnaires, and methodologies publicly available to benefit others working in the same context, or even collaborating with stakeholders to jointly monitor selected markets using a standardized methodology such as MARKit or the Joint Market Monitoring Initiative (JMMI). This collaboration can allow organizations to divide up the monitoring work and avoid any duplication of effort.
Key resources and tools
In addition to these tools, several standard market assessment toolkits include brief price monitoring tools to facilitate the ongoing monitoring of markets in crisis. Some of these are featured in our guidance note on market assessment: UNHCR’s Multi-Sector Market Assessment (MSMA); the ICRC/IFRC’s Rapid Assessment for Markets (RAM); and the ICRC/IFRC’s Market Analysis Guidance (MAG).
Catholic Relief Services (CRS)
Provides a framework for market monitoring, analysis, and response decision-making within medium- to long-term projects, using prices as the main indicator. Focuses on streamlining the market monitoring process as much as possible to help teams focus on analysis, providing useful guidance on how to interpret certain results and adapt programs accordingly. Aims to provide quick, actionable price data rather than a comprehensive portrait of market functionality and resilience.
