Inflation Is Coming for Your Coffee, Too

A barista handing a takeout coffee cup to a customer in a coffeeshop.

Image source: Getty Images

It's no secret that the cost of living has gone way up since the summer. We can thank rampant inflation for that.

These days, U.S. consumers are paying more for everyday expenses, and things could get worse before they get better. In fact, if you're someone who relies on your morning coffee to get through the day, here's some unsettling news. Inflation is expected to soon hit the coffee industry, and once that happens, your daily dose of caffeine could get a lot harder to afford.

Coffee isn't immune to inflation

On Nov. 18, coffee futures reached their highest level since January of 2012. And this year, the cost of coffee has risen more than 80% so far.

Now that doesn't necessarily mean coffee prices will rise immediately. But soon, consumers could start paying a premium every time they want a cup of joe.

Why are coffee prices spiking? We can blame supply issues, which is basically the theme of our current inflation situation.

Weather conditions in Brazil have been unkind in recent months, and since Brazil is the world's largest coffee bean supplier, that particular supply chain is now in jeopardy. If coffee suppliers have to spend more to source their product elsewhere, that cost is apt to get passed on to consumers. The result? Higher prices that are yet to come.

Why haven't prices soared already? One reason is that big names in the coffee industry commonly buy their product far in advance and have different strategies in place to protect themselves in the face of price hikes. As such, you may not be feeling the pain just yet when you visit your favorite coffee shop chain. But if coffee prices continue to spike, things could change quickly.

How to cope with rising coffee prices

If you brew your own coffee at home, you'll feel the pain of price hikes less than those who purchase coffee from a local shop or a chain like Dunkin or Starbucks. If your store-bought coffee starts getting too expensive to fit neatly into your budget, you may need to consider scaling back. That could mean making your own coffee a few days a week and cutting down the number of times you buy it outside the home.

If you're really in love with your store-bought coffee and can't bear to give it up, find another expense to cut back on. For the cost of one takeout meal a month, you may be able to treat yourself to 10 days' worth of the freshly brewed coffee you love.

Another option? Get a side hustle to boost your income. That will help you deal with not just the rising cost of coffee, but also the rise in everyday expenses, from gas to groceries. And while you might think the idea of taking on a second job to keep buying coffee is silly, remember that there's nothing wrong with making an effort to afford the things that bring you joy.

Of course, if your savings account balance is healthy and you need to dip in temporarily to pay for your beloved coffee, that's an option, too. But not everyone has savings, or savings outside of an emergency fund, in which case cutting back or boosting your earnings may be the best way to preserve your morning coffee habit.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends the following options: short October 2021 $120 calls on Starbucks. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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