More pain for coffee lovers in South Africa

The latest inflation data for South Africa shows that coffee lovers who are chasing a caffeine high continue to suffer, even as headline inflation remains stable.

Stats SA’s latest basket analysis shows that CPI stayed firm at 3.2% in February, with increases in certain categories like food tempered by cooling inflation in sectors like health, restaurants and other services.

Inflation climbed in sport and culture, food and non-alcoholic beverages (NAB), alcoholic beverages and tobacco, and communication.

The stats body said inflation cooled for products such as personal care and miscellaneous services, health, restaurants and accommodation, furnishings, household equipment and routine maintenance, and transport.

Unfortunately for caffeine lovers, coffee prices continued to lead the beverages category with inflation hitting 19.0%.

Frank Blackmore, lead economist at KPMG South Africa, said that global coffee prices continue to add pressure to imports.

A new report from the Food and Agriculture Organization (FAO) shows that world coffee prices reached a multi-year high in 2024, increasing 38.8% on the previous year’s average.

This surge in pricing has been driven by inclement weather affecting key producing countries.

In December 2024, Arabica—the higher-quality coffee favoured in the roast and ground coffee market—was selling 58% higher year over year.

The FAO said Robusta, used mainly for instant coffee and blending, saw a 70% real-term price surge.

The worrying news for coffee drinkers is that the pricing trend is unlikely to temper any time soon.

Coffee prices likely to continue climbing in 2025

The FAO warned that export prices may rise further in 2025 if major growing regions experience further significant supply reductions.

“Key factors behind the recent price increase include limited export quantities from Vietnam, reduced output in Indonesia, and adverse weather impacting coffee production in Brazil,” the FAO said.

Brazil and Vietnam together account for nearly 50% of world coffee production, it said.

In Vietnam, prolonged dry weather caused a 20% drop in coffee production in 2023/24, with exports falling by 10% for the second consecutive year.

In Indonesia, coffee production in 2023/24 declined by 16.5% year-on-year because of excessive rains in April-May 2023 that damaged coffee cherries. Exports dropped by 23%.

In Brazil, dry and hot weather conditions prompted successive downward revisions to the 2023/24 production forecast, with official estimates shifting from an anticipated 5.5% year-on-year increase to a 1.6% decline.

The FAO added that global shipping costs are also a major factor pushing up global coffee prices.

This could be exacerbated in 2025 as the US government’s trade and tariff war rocks markets—though this is yet to be a key target in the Trump administration.

According to commodity analysis from Barchart, coffee prices in the early months of 2025 remain elevated due to adverse weather conditions.

The group noted that prices for both Arabica and Robusta are trading higher due to lower-than-expected rainfall in Brazil, while the damage caused by dry El Nino weathering in 2024 continues to play out in yields.

While some groups are anticipating higher exports in the 2025/26 period, this will be coming off a lower base from the cuts experienced over the past years.