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Americans pay more for their coffee, because the prices of the caffeinated matter are close to record levels due to the winds of global production and higher costs of imported coffee exposed to prices.
The most recent edition of the Consumer Price Index (ICC) published by the Bureau of Labor Statistics has shown that coffee price increased by 20.9% compared to a year ago in August and increased by 3.6% on a monthly basis. This is the highest annual price gain reported in the data series since a reading of 21.2% in July 2011, and exceeded reading 20.3% in July 2022 in the middle of the overvoltage of cocvid inflation.
The prices of coffee sub-groups increased to a similar degree, BLS reporting that roasted coffee prices increased by 21.7% in annual shift and 4.1% on a monthly basis in August, while the cost of instant coffee increased by 20.1% compared to a year and 4.9% compared to the previous month.
The United States depends strongly on imported coffee and lack of capacity for large-scale domestic production, with less than 1% of the American coffee produced in the United States. This leaves few opportunities to increase interior offer at a time when prices have increased in the past year due to world production challenges which are now aggravated by prices striking imported coffee.
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Coffee prices have shot prices as well as world production challenges. (Justin Sullivan / Getty Images / Getty Images)
The organization of food and agriculture (FAO) of the United Nations noted that the world prices of coffee increased by 38.8% in 2024 compared to the previous year due to the disturbances of the offer, in particular bad weather in Vietnam, Indonesia and Brazil, which increases prices. Brazil and Vietnam represent about half of Global coffee productionby fao.
Brazil continues to feel dry which could have an impact on the production of coffee of this year, and it comes as Trump administration has raised prices on coffee imports. The White House imposed a flat rate at 10% of imports in April, at which coffee was exposed, then advanced with a 50% rate on imports from Brazil at the end of July.
Scott Lincicome, vice-president of Cato Institute of General Economics and Trade, told Fox Business that the two main factors stimulating the price of coffee are the factors of production and world prices.
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The United States imports almost all the coffee that Americans consume. (Istock / Istock)
He said, “If you look at what coffee prices have done in recent months, they have definitely taken a staircase – they have increased, then they flatten a little, then they started again. And this is this second where you really talk about a tariff effect.”
“It’s inevitable when you increase On a product that simply cannot be made in the United States and for which there is what we call inelastic demand, which means: I am addicted to coffee, there are a lot of drug addicts, we are not going to reduce our consumption much if prices increase, “said Lincicome.
“When you have this situation, there is no need for world coffee producers to know if they invoice too much or anything, they can simply transmit this to the consumer and I think that seems to be what is happening,” he added.
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President Donald Trump unveiled “reciprocal” prices on American trade partners in April. (Chip Somodevilla / Getty Images / Getty Images)
Lincicome noted that the Trump administration had recently published a executive decree Indicating that the United States would be willing to zero the prices on the products that the president determines are not available in the United States in sufficient quantities within the framework of trade agreements.
“The problem in which you are embarking on covered prices is that if you just apply prices without discernment, you finish grabbing a lot of products, it does not make sense to apply prices to these things. But there is a problem you encounter in the minute you recognize it, so you have to start.
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