The price of coffee beans hit a 7-year high on Friday amid ongoing logistics issues and global delivery concerns.
Arabica coffee bean futures, due to ship in March, rose up to 4.8% on Friday to $ 2.235 a pound, Bloomberg reported. Prices have increased by more than 90% compared to last year and have reached their highest level since October 2014.
Bloomberg noted that the price spike could lead to higher costs over time for US companies like Starbucks and Peet’s Coffee and Tea.
INFLATION LIKELY TO GET SEVERE BEFORE IT IMPROVES, GOLDMAN WARNS
The price hike comes as Brazil, a leading coffee producer, grapples with a prolonged drought and the aftermath of a cold spell that destroyed some crops. Meanwhile, excessive rainfall has adversely affected crops in Colombia, another leading supplier. Ongoing supply chain problems have made the shipping process difficult and resulted in higher costs.
Coffee traders told Reuters that the price hike was also due to higher demand and falling stocks of arabica beans. The high cost of fertilizers and the ongoing labor shortage are other factors.
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The cost of everyday products and raw materials like coffee and gas has increased in recent months as the global economy recovers from the COVID-19 pandemic. The consumer price index rose 6.2% year-on-year in October, marking the strongest increase in more than 30 years.