Coffee Prices Versus Gas PricesCoffee lovers may not notice it, but coffee prices have overtaken gasoline prices in the past year. As of April this year, a one-pound can of ground coffee costs $5.10 which is 40% more than the previous year, said the US Department of Labor. In contrast with oil prices, one gallon of regular gasoline averages $3.83 which is 37% more than the previous year.
With the current trend in the oil market, fuel prices are anticipated to stabilize, whereas coffee prices could continue to increase for some time. Currently, the cost of unroasted beans is on an upsurge. In fact, coffee producers were trading $2.61 per pound this week, almost twice as much as last year.
According to several top coffee producers and distributors, they are considering another price increase on their U.S. coffee products this week. The J.M. Smucker Co., producer of Folgers and Dunkin Donut coffee, is set to announce an 11% price increase, its fourth this year. Similarly, other coffee manufacturers such as Peet’s Coffee and Tea Inc, and Kraft Foods Inc. are considering a price hike.
Following the market’s upward trend, Starbucks Corp. has just announced a 17% price increase on all packaged coffee products in the US and 6% in Canada. This increase follows the 4% increase imposed in 2020. Starbucks has also increased its retail price on packaged coffee sold on the market.
Despite the soaring prices, coffee remains essential.
Consumers who can’t say no to coffee would rather look for alternative brands that cost less. After all there are other brands aside from the four leading coffee labels – Seattle’s Best, Godiva, Dunkin’ Donuts and Starbucks. Obviously, cheaper coffee labels enjoy the current trend.
On the production side, the International Coffee Organization has noted an increase by 8% on the coffee harvest due to the support from the Ivory Coast, Ethiopia and other coffee-producing countries. However, some of the major coffee exporters, such as Indonesia, have experienced smaller crops. Poor harvests are often attributed to environmental changes such as flooding, drought and other serious weather conditions. With the changes in the environment and the poor harvest, coffee prices continue to soar.
Coffee is just part of the bigger picture. More and more basic necessities are moving upscale. Although the average inflation rate is not as high as in the 70s, it is expected to continue its upward trend.