While South Africa’s overall inflation figures have remained relatively stable, a bitter reality is brewing for coffee aficionados. The latest data from Statistics South Africa reveals that coffee prices continue their relentless climb, adding a jolt of pain to the daily grind.
Despite headline CPI holding steady at 3.2% in February, driven by cooling inflation in sectors like health and restaurants, the price of coffee has surged by a staggering 19%. This caffeine-induced inflation is being fuelled by global market dynamics, with a new report from the Food and Agriculture Organization (FAO) highlighting multi-year high coffee prices worldwide.
KPMG South Africa’s lead economist, Frank Blackmore, attributes the price surge to persistent pressure from global coffee markets. The FAO report pinpoints adverse weather conditions in key producing countries as the primary culprit. Arabica coffee, the preferred choice for roast and ground blends, saw a 58% year-on-year price increase in December 2024. Robusta, used in instant coffee and blends, experienced an even steeper 70% rise.
The forecast for coffee prices remains bleak. The FAO warns that export prices are likely to climb further in 2025 if major growing regions continue to experience supply reductions. Vietnam, Indonesia, and Brazil, which collectively account for nearly 50% of global coffee production, have all faced significant production challenges.
Prolonged dry weather in Vietnam has led to a 20% drop in production, while excessive rains in Indonesia damaged coffee cherries, resulting in a 16.5% decline. In Brazil, dry and hot conditions have forced downward revisions of production forecasts.
Adding to the woes of coffee drinkers are rising global shipping costs. These costs could be further exacerbated by potential trade and tariff wars, particularly from the US, though coffee has yet to become a major target.
Commodity analysis from Barchart confirms that coffee prices remain elevated in early 2025 due to ongoing adverse weather conditions. Lower-than-expected rainfall in Brazil and the lingering effects of the 2024 El Nino event are contributing to reduced yields.
While some analysts anticipate increased exports in the 2025/26 period, this will be coming off a significantly lower base, meaning that the pain at the checkout is likely to continue.
South African coffee lovers, therefore, are facing a prolonged period of elevated prices, forcing many to tighten their belts or seek cheaper alternatives. The daily ritual of a good cup of coffee is becoming an increasingly expensive luxury.
