Skip to main content

Coffee and Inflation

Have you noticed that it's getting more expensive for a daily caffeine fix?

The Wall Street Journal recently reported that wholesale commodity coffee prices are at an all time high, and coffee shops just can't eat those costs anymore. I recently paid $3.00 (tax included) for a 20 ounce drip coffee at a local coffee shop. That's by-far the most I've ever paid for a cup of Joe.

(from ropesandpulleys on Flickr)

$3.00 is the exception, not the rule. Still, there's no denying that prices are going up, and it's almost guaranteed that they won't drop, even if the price of commodity green beans does.

Coffee inflation is interesting, because it happens in a way that's less noticeable than other goods and services. I know people who watch the price of gasoline like a hawk. They known, down to the penny, what a gallon costs at all times. Similarly, people are well aware when their rent or mortgage payments increase, for example. So why less attention to coffee?

It probably has to do with the fact that coffee prices aren't posted on giant boards all over the city for every person to see on a daily basis, like gasoline. Coffee is also generally a relatively small daily expense. Even if the monthly total that people spend on the drink is high, what's a couple more cents every day? This is unlike rent, where even a small increase can appear to be very large.

My coffee consumption isn't going to go down because the prices is going up. I still enjoy what economics call consumer surplus - what I pay is actually less than what I'd be willing to pay. For now, that works for me.

Comments

Anonymous said…
I heard coffee has a stronger correlation to inflation than even gold.

Popular posts from this blog

In Praise of Southwest's 'C' Boarding Group

A few weeks ago I saw a tweet from someone complaining that their Southwest Airlines boarding pass had been assigned A20 (meaning they would be at least one of the first twenty passengers to board the plane). Apparently this person though they should have been assigned a higher number, less their flight experience be considerably spoiled.

Despite the complaints, Southwest has resisted demands to assign seats on its flights, a decision which I personally applaud. I'll admit that I was skeptical when they rolled out the newest boarding procedure, assigning both boarding groups and a line number; but in hindsight it seems like one of the best operational decisions they've ever made. If nothing else, it effectively eliminated the infamous "cattle call" whereby fliers were getting to airports hours in advance and sitting in line on the floor as if they were waiting for the midnight showing of the new Star Wars movie.

When I was an intern at Southwest Airlines last winter, I…

So You Want to be a Southwest Airlines Intern?

My personal website must have pretty decent SEO - because in the past year, I've received about two dozen emails from aspiring Southwest Airlines interns looking to draw on my experience in search of their own dream internship. In the past two weeks alone a few new emails have already started rolling in...

(from flickr user San Diego Shooter)

If you've found your way here, you might be hoping for the silver bullet; a secret tip that will propel you above the competition. Unfortunately, I do not know any inside secrets. I can only share my experience as an internship candidate about two years ago and, rather than responding individually to future emails I anticipate to receive, I hope that potential interns will find the information posted here valuable.

Understand: Southwest Airlines is a very unique company. The corporate culture at Southwest is truly unlike that of nearly every other company. But you probably already knew that, since it now seems mandatory for every management,…

Good Advertising

The blogosphere seems to be one fire over Microsoft's new "Lauren" TV commercial. Frankly, I don't see what the commotion is about.



If the critics are correct, then "Lauren" is actually Lauren De Long, a Screen Actors Guild eligible actress; and apparently, if you look close enough, she never even enters the Apple store.

Even if all of that is true, it doesn't refute the fact that Apple's laptops are significantly more expensive than most PCs. It isn't a lie that Apple doesn't sell any 17-inch laptops for less than a grand. The advertisement doesn't make any reference to the quality of the machines (or contest any of the claims made in Apple's "I'm a PC" commercials) or provide any good reason to buy one other than price.

As far as I can tell, after years of horrible commercials and a series of flops, Microsoft seems to finally have hired an ad agency that put together a decent advertisement. It's not likely to persuad…