Why Brits could soon be paying more for their morning coffee

Coffee lovers were last night warned their daily caffeine fix will get more expensive after the price of beans hit the highest level in nearly 50 years.

The price of arabica coffee on global commodity markets jumped to $3.18 a pound (£2.50) - the highest since 1977.

Prices are up nearly 70 per cent so far this year - with experts warning the rise will feed through to what coffee drinkers are charged in the UK.

Ole Hansen, head of commodity strategy at Saxo Bank, said: ‘It’s almost certain that this increase will eventually filter through to consumers.’

While a £5 latte is commonplace in parts of the UK, high street customers are still being warned that a lid hasn’t been put on prices just yet.

The price of coffee beans has been driven higher by extreme heat and a poor harvest in Vietnam and Brazil.

Nestle, the world’s biggest coffee maker behind brands including Nescafe and Nespresso, warned earlier this month that it will continue raising prices and make packs smaller.

‘We are not immune to the price of coffee, far from it,’ said David Rennie, head of coffee brands at Nestle. ‘But we have priced and we will price.’

In a further blow, supply in Vietnam has been hit as coffee farmers switch to growing durian, the world’s smelliest fruit, to meet booming demand from China.

Beans only make up 10 per cent of the price for a cup of coffee with packaging, wages and shop rents also contributing to the creeping costs.

Trish Caddy, associate director at market research group Mintel, said: ‘The global coffee market faces volatility, with prices of arabica and robusta beans nearing record highs.

‘Rising labour and production costs, including higher wages and environmental issues, are also driving the price increases.

‘Affordability remains a key driver for nearly half of UK coffee shop consumers who prioritise price when selecting a coffee shop.’

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Robusta coffee prices have risen by 85 per cent this year after feeling the effects of the poor harvest.

Mr Hansen said: ‘With coffee production heavily reliant on Brazil and Vietnam-both grappling with adverse weather and reduced output-there’s a high risk that we could face even higher prices ahead.’

Paul Rooke, executive director of the British Coffee Association, said: ‘Climate-related issues are likely to become more prominent than previously seen, and of course when you see tighter supply with continued demand, the market price will react to that. 

'Along with new rules and regulations, these factors will form part of the considerations businesses will be making when setting their pricing - but let’s not forget that higher prices do mean a better return for coffee farmers around the world.’