Coffee prices are near record highs, with the CPI showing a 20.9% annual increase in August and a 3.6% monthly jump—the steepest yearly rise since July 2011.
Global supply issues and tariffs on imports are driving the surge, surpassing the 20.3% spike seen in July 2022 during the COVID inflation wave.
Roasted coffee prices jumped 21.7% year-over-year in August and 4.1% monthly, while instant coffee rose 20.1% and 4.9%, BLS data shows. With less than 1% of U.S. coffee produced domestically, reliance on imports leaves little room to boost supply as global production struggles and tariffs drive prices higher.
The United Nations’ Food and Agriculture Organization reported global coffee prices rose 38.8% in 2024, driven by bad weather in Brazil, Vietnam, and Indonesia—nations that produce about half the world’s supply. Brazil’s ongoing drought threatens further cuts, while new U.S. tariffs under the Trump administration, including a 10% levy in April and a 50% tariff on Brazilian imports in July, are adding pressure.
Scott Lincicome, VP of general economics and trade at the Cato Institute, told FOX Business that rising coffee prices are mainly driven by global production issues and tariffs.
He said, “If you look at what coffee prices have done over the last few months, they’ve definitely done a bit of a stair step – they spiked, and then they flattened a bit, and then they’ve gone up again. And it’s that second one where you’re really talking about a tariff effect.”
“That’s inevitable when you raise taxes on a product that simply can’t be made in the United States and for which there is what we call inelastic demand, meaning: 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,” Lincicome explained.
“When you have that situation, there is no need for global coffee growers to worry about whether they’re charging too much or whatever, they can just pass that on to the consumer and I think that appears to be what’s going on,” he added.
