scorecardCoffee shops are now charging almost $5 on average for a cup of coffee. Inflation and drought could push prices even higher.
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Coffee shops are now charging almost $5 on average for a cup of coffee. Inflation and drought could push prices even higher.

Avery Hartmans   

Coffee shops are now charging almost $5 on average for a cup of coffee. Inflation and drought could push prices even higher.
Retail2 min read
  • The price of a cup of coffee has jumped 7.6% since last year to an average of $4.90.
  • The reason is twofold: inflation and extreme weather in Brazil, a major coffee exporter.

It's not in your head — a cup of coffee has gotten more expensive.

At coffee shops nationwide, a single cup of coffee now costs $4.90 on average, a 7.6% increase from this time last year, according to NPD Group data cited by The Wall Street Journal. Even making coffee at home is more expensive these days, Labor Department data shows: Coffee prices in July jumped 20.3% from the year prior.

The reason behind the cost increases appears to be twofold: inflation and weather.

Though inflation cooled slightly to 8.5% in July, costs remain high across the US, particularly when it comes to food. The cost of groceries rose 1.4% from June to July, and eating at restaurants got more expensive as well. In fact, eating outside the home cost 7.6% more in July than it did a year earlier, according to Labor Department data.

But inflation isn't the only force affecting prices, at least when it comes to coffee. In Brazil, the world's biggest coffee exporter, farmers experienced drought, then frost, which damaged crops of arabica beans, a type of high-end coffee plant. Some farmers estimate their crops could be cut in half as a result, which would nudge the cost of coffee even higher, The Wall Street Journal reported.

Despite these challenges — and the price hikes that come with them — it seems coffee companies aren't seeing customers cut back.

At Starbucks, for example, customers are still buying to-go coffee, even after a series of price hikes. Despite drinks costing roughly 5% more now than they did last year, Starbucks is "not currently seeing any measurable reduction in customer spending or any evidence of customers trading down" to cheaper items, interim CEO Howard Schultz told investors during the company's third-quarter earnings call this month.

According to a report from Rabobank cited by the Journal, spending at coffee shops increased 1.9% in June compared with the same period in 2021. It seems that to-go coffee has become one of those affordable luxuries consumers still allow themselves, even when times are tough financially.




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