What your daily coffee tells you about the economy
For many, coffee is more than just a beverage, it is a liquid hug, an experience or even an art form. Did you realise that your favourite coffee can be used as an economic forecaster? Your daily coffee has more to say about inflation in the Indian economy than you’d think.
The hidden force of purchasing power, inflation, undermines your hard earned money over time as the prices are increasing.
The Indian consumer has witnessed a roller coaster ride in the prices of coffee due to global and domestic factors like raw material cost, supply chain disruptions and global economic trends.
In 2023, Arabica bean prices shot up by 10% thanks to erratic monsoons and skyrocketing fertiliser costs. Picture this, a coffee bean’s journey from farm to cup. Now imagine fuel prices spiking and labor costs climbing. Boom! Your coffee costs extra.
Here’s a stat to sip on, According to the Consumer Price Index (CPI), food and beverage inflation hit 6.5% in mid-2024, with coffee prices climbing by 8% year on year. That’s a latte pressure on your wallet! But these numbers are more than just data, they’re a caffeine-furled story of rising prices.
Let’s consider the price of a regular cappuccino at a popular chain. In 2020, it might have cost Rs. 150. By 2024, the same cup costs around Rs. 200, reflecting an approximate 33% increase over four years. What’s driving this surge? Agricultural wages are climbing faster than you can say “extra foam”, Fertilisers and pesticides are pricier, thanks to supply chain issues, Fuel and electricity hikes make every stage from roasting to serving more expensive.
Ongoing inflation has a direct impact on consumer spending, the ability to save money, and the economic growth of the entire economy.
Coffee’s inflationary tale is just the tip of the iceberg. Persistent price hikes impact everything from your grocery bill to the nation’s GDP. A 2024 Reserve Bank of India (RBI) survey found 76% of respondents cutting back on indulgences like dining out and premium beverages due to rising prices. That’s a serious buzzkill. This shift in consumer behaviour is a direct response to inflationary pressures.
So the next time you pay for your latte, think of the economic brew this represents.
The Fiscal Factor 
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