Commodities & Metals

The Price of Coffee Is Falling

Two-thirds of Americans drink coffee every day. That is more than 200 million cups. Coffee is like gasoline. A rise in prices hit the pocketbooks of tens of millions of people. Fortunately, the price of coffee has started to tick down.

The International Coffee Organization tracks coffee prices every day. The unit of measure is cents per pound. Coffee started the month at $155.99 and dropped to $152.19 on December 8. In late May, the figure was over $200.

As with most agricultural commodities, coffee prices are affected by the weather. In the case of coffee, the season has been rainy in Brazil. The strength of the dollar is an incentive to get coffee from regions outside the U.S/ to consumers in America.

It seems like a joke to say coffee prices can change American spending habits. However, it is an observation that carries a great deal of truth. Starbucks recently raised the price of a cup of coffee by $.06. Add that to more expensive gas, more expensive home heating oil, more expensive clothing, and more expensive food. Inflation in the U.S. has been rising 8% year over year monthly for most of 2022. Inflation is not one thing. It is one thing. It is everything in the portfolio of American consumption.

When Americans think about inflation and the extent to which it hurts their purchasing power, they should think about coffee. If its prices drop along with the prices of another dozen goods and services most people use every day, the sharp inflation will be over.

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