Bad news about coffee prices in South Africa

The latest inflation data shows that coffee prices in South Africa remain on the rise, and experts warn that more pain is coming due to supply constraints, input costs, currency fluctuations, and global trade wars. 

The latest inflation data for South Africa shows that coffee lovers continue to suffer, even as headline inflation has dropped to a five-year low.

Stats SA’s latest basket analysis shows that CPI declined more than expected from 3.2% in February 2025 to 2.7% in March 2025.

The last time inflation was lower than this was in June 2020, when it reached 2.2%, and Stats SA said the decline was mainly due to lower fuel prices and softer tuition inflation.

The annual rate for food & non-alcoholic beverages (NAB) edged lower to 2.7% in March from 2.8% in February.

Vegetables, fruits and nuts, cereal products, meat, and fish registered higher annual inflation rates. In contrast, oils and fats, hot beverages, milk, other dairy products, eggs, cold drinks, sugar, confectionery, and desserts had lower rates.

Coffee and tea drinkers also continue to feel the pain. Although the annual rate for the hot beverages category declined slightly in March, it remains high at 14.4%. 

The category has seen double-digit inflation in all but five of the 32 months since August 2022. Coffee prices continued to lead the beverages category, with inflation hitting 18.8%. 

This follows the 19% increase reported in February, showing that the price increases remain sticky despite the overall drop in inflation. 

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

Experts have warned that this will likely continue into 2025, with some roasteries and coffee suppliers already hiking prices of up to 30%. 

Coffee drinkers should expect more pain to come

The FAO noted in its report that the key factors behind the price increases include limited export quantities from Vietnam, reduced output in Indonesia, and adverse weather impacting coffee production in Brazil.

It stated that Brazil and Vietnam account for nearly 50% of the world’s coffee production, which would severely impact the global supply chain if issues arise.  

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%.

The FAO added that global shipping costs and disruptions are also a significant 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.

Local coffee roastery Quaffee agreed with the report and highlighted similar concerns that will ultimately impact the cost of South African coffee prices.  

Quaffee listed several other factors that affect local coffee prices, including coffee production shortages and tariffs that could drive up prices. 

Other factors the company mentioned include rising production costs such as fertiliser and labour costs, strong global demand, particularly from the growing middle class in China, and currency fluctuations.

Quaffee explained that coffee is traded in US dollars, and the dollar’s strength is relative to currencies in producing countries (e.g., the Brazilian real or Colombian peso).

This has impacted prices. A stronger dollar makes coffee more expensive for buyers using other currencies, including the South African rand, which has experienced volatility. 

Another interesting reason that coffee prices are likely to rise is what Quaffee described as long-term structural issues. 

These issues include ageing coffee trees that are becoming less productive, ageing farmers, coupled with the lack of interest from the next generation and climate change. 

“Climate shifts are making coffee cultivation more challenging, as coffee plants are sensitive to temperature and rainfall changes. This has reduced productivity in traditional growing regions,” said Quaffee.

Due to the number of factors working against coffee prices, the roastery explained that this will inevitably increase prices passed on to the consumer. 

“Whenever the cost of raw materials increases, the price of the final product must also rise. For us, the final product is coffee beans,” it said. 

“At Quaffee, we have endured significant price increases over the past 8 months, and we’ve reached a tipping point.”

Therefore, the company explained that it must remain financially (and environmentally) sustainable, adding that the prices it pays for raw coffee and consumables have increased by 40 to 70%.

Considering this, the company noted that it had already increased coffee prices by 20 to 30% as of the end of February 2025. 

It said the increase is directly linked to the rising costs of the coffee, adding that if coffee prices continue to rise and fail to stabilise, it may need to review its pricing again.