Coffee Prices Perk Higher

Articles
September 29, 2011

Coffee Prices Perk Higher

Significantly higher prices for one of the supermarket’s main staples, coffee, has been causing consumers to reach deeper into their pockets since the beginning of this year, according to a Food Institute look at this soaring market. “The price for a can of coffee has risen in seven of the past eight months,” commented the association’s president, Brain Todd who added that “For the past two months, prices were up 20% at retail from a year earlier – the largest year over year increases since late 1997.” www.foodinstitute.com.

Significantly higher prices for one of the supermarket’s main staples, coffee, has been causing consumers to reach deeper into their pockets since the beginning of this year, according to a Food Institute look at this soaring market. “The price for a can of coffee has risen in seven of the past eight months,” commented the association’s president, Brain Todd who added that “For the past two months, prices were up 20% at retail from a year earlier – the largest year over year increases since late 1997.” 

But supermarket operators and other food retailers have been feeling the pressure on coffee prices even longer, notes The Food Institute. They have been paying nearly 20% more for their supplies since March of this year. The Food Institute pegs wholesale coffee price inflation for the year through September at just over 18%.  On the retail side price inflation averaged 13.5% through the first eight months of 2011, indicating retailers absorbed about one-quarter of the increase. A bevy of supermarket operators report that they are doing their best to try to keep prices down for their shoppers.

These increases are well above overall retail food inflation as the accompanying graph shows, which reached 6% versus a year earlier in August and was up 4.1% on an annualized basis. And while coffee price advances contributed to that overall 6% increase, it accounts for less than 2% of all retail food prices in the food-at-home price index issued each month by the U.S. government. In comparison, meats and poultry make up 23% of the overall retail price index.

There is not a single reason why coffee prices have escalated but more of a series of occurrences, some caused by nature and others perhaps man-made. One contributing factor is a shortage of high quality Arabica coffee beans used by the gourmet coffee market which pays a premium for them from nation’s such as Columbia and Peru where weather problems tempered production in 2010. A variety of weather related issues in Brazil and Columbia also contributed to more speculation in these markets this year accounting for the man-made contribution to increased prices.

For the time being however, consumers as well as retailers, can expect to pay more for their coffee supplies, notes The Food Institute, which has been following food prices since 1928.

For more, go to the Food Institute website at www.foodinstitute.com.