Retail coffee prices have risen 21% year over year, reports CNN [1], much higher than overall inflation for food prices, which rose 2.9% year over year as of July, according to the U.S. Bureau of Labor Statistics’ consumer price index. The cost is also well above the Federal Reserve’s target inflation rate of 2%.
So what’s driving this massive price increase? Tariffs are largely to blame, as coffee-growing countries are being hit hard. For example, as CNN reported, Colombia now faces 10% tariffs, and Vietnam 20%. These countries are the second- and third-biggest exporters of coffee by net weight, respectively.
However, it’s Brazil’s tariffs that are causing the biggest headache as the U.S.’s primary supplier of coffee. The country faces 50% import fees, and CNN reports that the high price is directly attributable to President Donald Trump’s anger over the recent conviction of ally and former Brazilian President Jair Bolsonaro.
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While the price of a cup is already bad enough, Diane Swonk, chief economist at KPMG US, predicts it will get worse. Coffee prices “will easily exceed the record as the full effects of the 50% tariffs levied on Brazil last month work their way onto store shelves,” she told CNN.
So, what can you do if you want to keep enjoying your brew? Here are some tips on how to keep coffee in your budget.
America runs on coffee
The United States is the largest importer of coffee in the world [2], and 99% of our coffee is imported [3]. (This is because the coffee bean’s ideal climate is centered around the equator between the Tropics of Cancer and Capricorn.)
As you may imagine, coffee is big business. Americans spend nearly $110 billion on coffee every year [4]. This creates nearly 2.2 million U.S. jobs, and is responsible for about $343 billion in gross domestic profit every year.
As a coffee-loving nation, two-thirds of adults drink coffee every day. So will the popularity of the brew be damped by higher prices? Only time will tell. What is certain right now is that more cost increases are on the horizon.
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The growing cost of groceries
Folgers is projecting another price hike on its coffee, according to an earnings call last month, CNN reported. The brand already raised prices in May and August.
Starbucks, however, is holding steady on its prices for now. CNN reported that the company doesn’t expect price increases until 2026, as its current agreements with suppliers predate the tariffs.
With food prices rising across the board, the extra bump in the price of coffee may hit shoppers in the wallet, especially if they’re used to heading to a café for their daily dose of caffeine. While it may be cheaper to brew at home, the rising cost of milk (4.5% year over year) and sugar (4.2% year over year) will also make the morning cup a little harder to swallow.
Along with the cost of eggs, which peaked in March 2025 at $6.23 per dozen and are now sitting at $3.59 per dozen, and bacon prices, up 7.4% this year, a typical breakfast is costlier than ever.
While a viral Wall Street Journal article from 2023 cynically urged Americans to consider skipping breakfast to cut down on their food costs [5], there are better ways to budget for rising prices other than going hungry.
Is it time to pour out your pour over?
While the rising prices may be cause for concern, it’s unlikely America’s coffee addicts will be quitting their daily pick-me-up cold turkey. In addition to the habit and ritual that comes with coffee, there’s another food trend that’s likely to keep the beans booming: Gen Z’s ‘little treat’ culture.
The Guardian explains that as prices for luxury goods rise and traditional financial goals like owning a home become ever more unaffordable, young people are looking for low-cost alternatives to traditional retail therapy to give them a mood boost [6]. ‘Little treats’ like snacks, smoothies and a daily coffee run have become ways to fit affordable-ish indulgences into their budgets.
Keeping room for coffee in your budget is a matter of perspective.
If you truly enjoy your trip to your local barista or the Starbucks on the corner, make sure to build your brew into your budget so that it doesn’t derail your other spending and savings goals. If it’s more of a habit than an indulgence, cut back on pricy lattes and funnel your fun money towards other activities you find more rewarding.
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How to fit costly coffee into your grocery budget
While it may be easy to cut down on your daily Dunkin’, you’ll probably still want to brew a cup or two at home. Here are some tips for trimming down your food costs, so that rising coffee costs don’t blow your grocery budget:
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Shop smarter by comparing flyer prices and using coupons to stretch your grocery budget, especially when buying pantry essentials, and consider off-brand items to save further.
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Save money by cooking meals in bulk and freezing leftovers, cutting down on waste and helping avoid last-minute meal deliveries.
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Consider reducing how much meat you eat and, instead, shifting your spending toward affordable, nutrient-rich alternatives like beans and other meat substitutes.
American-grown coffee, no, but buying what you can locally offers another opportunity for savings. Take advantage of local farmers markets to find better prices on fresh, in-season produce.
Article sources
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[1]. CNN. “Coffee prices haven’t surged this much in decades”
[2]. The Observatory of Economic Complexity. “Coffee”
[3]. National Coffee Association. “Coffee in the U.S.”
[4]. National Coffee Association. “Coffee’s economic impact”
[5]. Wall Street Journal. “To save money, maybe you should skip breakfast”
[6]. The Guardian. “We live in a treat culture – and gen Z is splurging on snacks”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.