close up of coffee cup

Coffee has Become an Expensive Treat

Coffee in the morning could soon become an expensive treat for many. Coffee prices are reaching new heights and now stand at $248.28 per pound.

Coffee Price Chart

Looking at the price chart over the last 2 years, one can see a continuous increase in prices. Over the last 3 years, the price of coffee has increased by more than 130%.

The reason for this is indeed pushed on the unfavorable weather conditions in the main cultivation country Brazil, but when looking at the price chart we can probably see something else and that is probably an inflation-related price increase. The price chart of the last 12 to 13 years shows a similarity to today’s rising prices and that at the same time as the banking crisis.

13 Year Coffee Price Chart

What is alike to the current crisis is the massive bond-buying, especially by the U.S. Federal Reserve, which is flooding huge amounts of U.S. dollars cheaply into the market through its QE program. This leads to inflationary pressures as more fiat currency chases the same or less amount of goods or services.

Starbucks Raises Prices

In the meantime, Starbucks will raise prices on their goods. The main reasons for this are rising inflationary pressures, labor shortages, and continuing issues with COVID in many places. For example, in China, the company’s fastest-growing market, there are still life restrictions due to local COVID outbreaks.

In a conference call, Starbucks CEO Kevin Johnson said, “When the omicron surge began, inflationary costs and staffing shortages were amplified, well in excess of our expectations.”

With that, Starbucks is also seeing inflationary pressures continue to build. However, it remains to be seen by how much prices will be raised.

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