4 Types of price instability
Following categories of price instabilities are to be understood in order to have a comprehensive picture of the prices.
i) Short term instability or seasonal price variation
ii) Intra-year instability or seasonal price variation
iii) Inter-year instability or trend price variation
iv) Long term instability or cyclical price variation
Short term instability:
Short term instability refers to the fluctuation in prices which last for comparatively short period of time. Prices may change from week to week, from day to day and within a day.
Intra-year instability is due to the behavior of prices seasonally in a year.
Prices of farm products never remain the same from one year to another. Inter-year instability means the price movements from year to year.
Long term instability:
Long term instability is related to price behavior over a period of time. Long term instability is related to the long-term trend in prices.