Business News Asia
Coffee prices are at a 10 year high! Yes, heard correctly coffee prices are as high as last 10 years ago.
Analysts even expect the price increase to continue until 2023.
The price of coffee has already risen another 5% today making a current price of $2.5 per pound.
According to sources, the current increase is mainly due to weather conditions in producing countries such as Brazil, but also because of the global supply chain disruption that has occurred since the onset of the COVID 19 pandemic.
Especially the weather situation in Brazil was not good for coffee growing as temperatures were quite low this year.
But if we look at the past, we see that the last time we saw such a price increase in coffee was 10 years ago. This coincides exactly with the time when the banking crisis dominated the world. Now it seems to be related to the COVID pandemic. However, what we can see across all sectors and commodities is the general price increase which suggests that it is not just the bad weather causing this.
What both periods have in common is the injection of capital into the economy. During the banking crisis, the first central banks, such as the U.S. Federal Reserve, started QE programs to stimulate the economy. By increasing the quantity of currency, commodity prices rose, the same thing we are seeing at the moment. Rising consumer prices mean rising inflation for central bankers, but this is more due to the increase in the amount of currency in circulation.
So be it what it is, we see however through the complete product range an increase in prices which definitely means a rise in inflation. After a year of rising inflation, even the central bankers have realized that prices will probably rise for more than a short time and are trying to whitewash the situation. Keeping the population entertained is the motto before they realize that their purchasing power is going to float, the measures to fight inflation seem to be useless.
Or as Fed Chairman Powell puts it, “I think it’s probably a good time to retire that word [Transitory] and try to explain more clearly what we mean.”
And we are all waiting anxiously to see what it means.