BANK of Jamaica (BOJ) researchers are proposing a new system for tracking international commodity threats and closer monitoring of global food prices, arguing that Jamaica’s monetary policy machinery should distinguish between food, oil and other external price shocks rather than responding to them in the same way.

Among the recommendations contained in a new BOJ working paper is the creation of a Commodity Threat Matrix to track major commodity groups separately and assess how strongly, and for how long, movements in international prices are likely to affect Jamaica.

The researchers are also proposing closer collaboration among the BOJ, Statistical Institute of Jamaica (Statin) and Ministry of Agriculture, Fisheries and Mining to improve monitoring of how global food-price movements are passed through to consumers locally.

The recommendations follow the study’s finding that global food-price shocks produce larger and more persistent inflation effects in Jamaica than either oil or alumina.

The paper, prepared by BOJ economists Calvin Grant, Ashaud Shirley and Reneisha Craig, said treating commodity inflation as a single external disturbance risks overlooking important differences in how various shocks work their way through the economy.

“A uniform policy response to all commodity price disturbances is therefore unlikely to be optimal,” the researchers said.

The authors said one of the challenges for policymakers is separating an imported food shock from increases that may be amplified locally by logistics, market structure or other domestic factors.

To address that, they suggested a stronger monitoring mechanism involving the BOJ, the agriculture ministry and Statin to track the movement of prices from international markets through to Jamaican consumers.

Such a system could measure the speed of pass-through and help determine how much of an external shock is being absorbed within the domestic economy before reaching households.

The researchers also proposed regular Global Food Inflation Decomposition Reports, which could help policymakers judge whether a food-price shock is likely to fade on its own or persist long enough to require a stronger response.

“A more robust food price monitoring mechanism involving the bank, the Ministry of Agriculture, Fisheries and Mining; and Statin could track global-to-domestic price transmission, measure pass-through speeds, and identify the domestic economy’s ability to absorb the shock,” the paper said.

The proposals come as Jamaica faces renewed inflation pressure, with Statin reporting that point-to-point inflation climbed to 7.9 per cent in August, up from 7.5 per cent in July and above the BOJ’s four to six per cent target range. Monthly inflation was 0.6 per cent.

Food was the main driver during the month. The index for Food and Non-Alcoholic Beverages rose 1.5 per cent, with the food component itself increasing 1.6 per cent as consumers paid more for items including Irish potato, sweet potato, cabbage, tomato and pumpkin. Transport costs also rose 0.7 per cent, reflecting higher petrol prices and toll rates, while housing, water, electricity, gas and other fuels fell 0.7 per cent, largely because of lower electricity rates.

Those domestic food pressures are emerging at the same time as global energy markets remain unsettled. Brent crude moved above US$100 a barrel earlier this month as Middle East supply disruptions intensified, although prices have since eased as Saudi Arabia increased exports through Gulf terminals. Supply conditions remain fragile, with traffic through the Strait of Hormuz still well below normal levels and shipping costs elevated.

Infographic with changes in crude oil prices since January 1, 2026 with key dates in the Middle East war, according to Bloomberg data and information from AFP bureaus. (Graphic: AFP)

Rethink interest-rate response

The researchers also want further examination of whether monetary policy should react differently depending on what is driving inflation.

Their analysis found that oil-price shocks tend to prompt an earlier tightening in monetary conditions, even though food-price increases eventually have a larger and more persistent effect on inflation.

Food shocks, by comparison, initially coincide with lower real interest rates, a pattern the study said may reflect policymakers being more willing to wait out supply-driven food inflation because higher interest rates cannot directly reverse international food prices.

But the researchers cautioned that the persistence of food inflation means that approach can carry risks.

“The evidence shows Jamaica’s monetary response differs across commodity shocks and sometimes is misaligned with their relative persistence. A refined policy reaction function could formally test whether policy should vary with the source of inflation,” they said.

The recommendation does not mean interest rates should automatically rise whenever global food prices increase. Rather, the researchers are calling for closer analysis of when an external food shock is likely to be temporary and when it risks becoming embedded in domestic inflation.

The working paper also compared its findings with the BOJ’s existing Quarterly Projection Model, or QPM, which plays an important role in the central bank’s forecasting process.

While the QPM explicitly includes crude oil prices, it does not separately incorporate global food prices, the researchers noted.

Their alternative model found that including a wider range of commodity shocks and allowing overseas economies to respond to them captured additional effects that could subsequently reach Jamaica through inflation, demand and the exchange rate.

The researchers said their model should be viewed as complementary to the QPM rather than a replacement.

With food accounting for roughly one-third of Jamaica’s consumer price basket, the paper argues that identifying the source and likely persistence of imported inflation could become increasingly important to monetary policy decisions.