If you’re the kind of person who can’t start the day without a cup of coffee, I’ve got some tough news for you. Coffee is becoming increasingly expensive, and the reasons behind this trend extend beyond your local café raising prices. Currently, a combination of adverse weather conditions overseas and new tariffs in the U.S. is driving coffee costs to near-record highs. Let’s break it down together so you know exactly why your morning brew is costing you more.
Coffee prices hit record highs
According to the latest Consumer Price Index (CPI) data, coffee prices jumped 20.9% over the past year. Even more worrying, they rose 3.6% in just one month, August. To put that into perspective, this is the biggest annual increase we’ve seen since July 2011.
And it’s not one type of coffee. The numbers show:
- Year-over-year prices on roasted coffee are up 21.7%.
- Instant coffee is up 20.1% year over year.
- Both categories also saw dramatic monthly increases.
- So if you brew your beans at home or just reach for instant for the sake of convenience, you’re paying more.
Why the U.S. is so vulnerable
Here’s the catch: the United States grows less than 1% of the coffee that is consumed by Americans. Practically all is imported, so if something goes wrong with supply or trade policies, there is no immediate backup plan.
Some other goods can be manufactured at home to replace shortages, but not coffee. That is why American coffee drinkers sense change throughout the world almost simultaneously.
The role of bad weather
Coffee trees are sensitive. They need extremely specific conditions—rainfall, temperature, and soil. Unfortunately, the largest producers of the world—Brazil, Vietnam, and Indonesia—have suffered unbearably due to unusual weather.
Brazil has gone through prolonged dry spells, endangering crops.
Vietnam and Indonesia have seen storms and erratic rain that ruined crops.
The Food and Agriculture Organization (FAO) estimated that world coffee prices jumped 38.8% in 2024 because of these supply disruptions. And the problems aren’t slowing down this year.
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Tariffs make it worse
Besides weather issues, tariffs are imposing extra costs. Earlier this year, the Trump administration introduced:
- A 10% April import tariff.
- A 50% July tariff on Brazilian imports.
Since Brazil produces almost one-third of the world’s coffee alone, these tariffs immediately had an effect. The importers simply pass the added cost on to American consumers, and then they pass it along to us, the buyers.
Why coffee prices won’t fall quickly
Here’s where it gets tricky. Coffee has what economists call inelastic demand. That means people keep buying it even when the price goes up. Think about it: if you’re a coffee lover, you’re not suddenly going to give up your daily cup because it costs a little more.
Scott Lincicome, an economist at the Cato Institute, put it this way: “I’m a coffee addict, there are a lot of coffee addicts, we are not going to reduce our consumption much if prices go up.” Because demand does not change, we producers and sellers don’t have to worry about charging too much—we’ll keep on buying it.
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What it means for you
So what does this translate into in your pocketbook? Well, if you were spending $3 last year on a cup of coffee at your local café, you might be spending something more along the lines of $3.60 or $4 now. Doesn’t sound like a lot, perhaps, but over a month, or a year, it adds up—and even more so if you drink more than one per day.
In your grocery store, the bag of roasted coffee you like will likely have gone up a few dollars too. And since tariffs still exist and the weather is volatile, prices are unlikely to go down anytime soon.
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Is there any relief ahead?
The government has indicated possible exemptions from tariffs for products that cannot be produced in the U.S., like coffee. Yet, nothing has actually been implemented. Meanwhile, importers and retailers will continue to pass the extra costs on to us.
In the long term, there’s optimism that worldwide supplies will bounce back once weather patterns normalize. Brazil, for instance, is exploring methods to make crops more resilient to drought. But that may be years before it becomes effective.
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