Coffee prices surge as inflation hits three-year high
Coffee hit 273.70 cents a pound in March as Strait of Hormuz shipping shocks and crop damage in Brazil and Viet Nam squeezed supply. April eased slightly, but café costs still face pressure.
Coffee prices climbed hard in March as conflict in the Middle East and disruptions around the Strait of Hormuz pushed up energy and freight costs, adding fresh pressure to a market already strained by weather-hit crops. The International Coffee Organization said its Composite Indicator Price averaged 273.70 US cents a pound in March, up 2.3% from February, before easing to 266.24 cents in April.
That April pullback did not erase the shock underneath it. The ICO said the Strait of Hormuz closure since 4 March lifted crude oil prices 55.8% and shipping freight costs 43.6% between 27 February and 30 April, a steep rise that matters for every step in coffee’s journey from origin ports to roasters, importers and café supply chains. The market in April was balancing those higher hydrocarbon and freight costs against a continued improvement in the global supply outlook.
The supply side is still tight. The Food and Agriculture Organization of the United Nations said coffee export prices were already elevated because of limited export quantities from Viet Nam, reduced output in Indonesia and adverse weather in Brazil. In Viet Nam, prolonged dry weather cut coffee production by 20% in the 2023/24 season and exports fell 10% for a second consecutive year.
That matters because Brazil and Viet Nam together account for nearly half of global coffee production, while the European Union and the United States are the largest consuming and importing markets. When those two origins tighten and shipping grows more expensive, the effects reach supermarket bags, espresso programs and the price boards at independent cafés.
The broader inflation backdrop is not helping. U.S. consumer inflation rose at its fastest pace in three years in May, driven higher by energy prices tied to the Iran war, which widened the cost pressure on everyday staples. For coffee, April’s dip from March showed the market can cool when supply improves, but the combination of war risk, freight costs and drought points to a price environment that is still under strain rather than headed back to calm.
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