Image copyright Swiss Economy Image caption The retail price of a cappuccino fell by 2.3% in March
The price of coffee is about to take a sharp turn upwards, with each drink expected to cost the consumer an average of 5p more than at present.
The cost of a cappuccino has fallen by 2.3% in March, as the discounting of coffee from some UK retailers has expired.
However, inflation-linked coffee prices are expected to hit an all-time high of 6p a kilo this year, says the UK’s major roasters.
That is double the official rate of inflation and way above the 2% cap to limit rises.
“There are no signs that coffee prices are going to fall. There are no price reductions,” Tony Daly, chief executive of Arla Foods, told the Financial Times.
Processors such as Arla, Caffe Nero and Princes Distributing are well placed to hold prices at the current level as they can rely on rising wholesale prices to make up the difference – but every penny extra in the price of a coffee is another burden to the UK’s low-income households.
Fever-Tree – which buys its coffee from Robusta producers in Indonesia – said that British supermarkets were holding back from discounting coffee because most consumers were in the early stages of a new five-year coffee-buying cycle.
Image copyright Getty Images Image caption British supermarket chains are holding back from discounting coffee for new customers
It is also likely that such price increases are a sign of things to come as coffee demand continues to grow at a strong pace.
Global coffee production in 2017 was only 0.8% higher than it was in 2016, according to the latest International Coffee Organisation statistics.
Demand, however, grew by 10.2% – led by China and India.