Due to the dramatic rise in costs, but also climate adversities, the favorite beverage became 16.9 percent more expensive.

Coffee is a mandatory ritual in much of Europe; in fact, the regions where it is not part of the daily routine or is simply so bad that nobody drinks it are in the minority. And this year it has moved closer to the category of – luxury goods.

Data for August show that the price of coffee in the EU was on average 16.9% higher compared to August 2021, while in August 2021 the price of coffee was on average 0.5% higher compared to August 2020, according to Eurostat.

The situation is even worse for consumers who drink it with milk and/or sugar because the prices of those items have risen even more over the past year. The price of fresh whole milk rose on average across the European Union by 24.3% between August 2021 and August 2022, while the price of fresh low-fat milk rose by 22.2% in the same period.

In August 2022, annual inflation for sugar amounted to +33.4%, compared to +0.8% in August 2021.

Frost and drought in Brazil

The data show that all four items recorded price increases in all European Union member states, except Malta. When examining the highest annual inflation increase for each product, Lithuania and Estonia appear in three of the four products: coffee and fresh low-fat milk for both, fresh whole milk (+45.8%) for Lithuania and sugar (+81.2%) for Estonia.

The highest annual inflation in August 2022 was recorded for sugar, with a significant increase in Poland of 109.2%, followed by Estonia (+81.2%), Latvia (+58.3%), Bulgaria (+44.9%) and Cyprus (+43.2%).

When it comes to coffee, Finland recorded the highest annual inflation of +43.6% in August 2022, followed by Lithuania (+39.9%), Sweden (+36.7%), Estonia (+36.4%) and Hungary (+34.3%), while regarding milk, consumers in Hungary, Lithuania and Croatia fared the worst.

In addition to transport costs, weather conditions in Brazil, the world's largest producer, also had a very unfavorable impact on the price of coffee.

After frost unexpectedly appeared in mid-July 2021, Brazil was hit in 2022 by a fairly long dry period, and that combination led to a very poor harvest for 2022/23. And in the previous season it had been record-breaking.

VAT does not help either

“The cost shock from the 100% year-on-year increase in raw coffee prices has reached the highest level in the past ten years,” the HUP coordination recently warned.

As for Croatia itself, it does not help that we have a special tax on coffee, which discourages consumption, a remnant of the time when coffee was considered a luxury. Interestingly, some countries have a lower VAT rate specifically on coffee, around 9%. Apparently, less is drunk there…

Source: poslovni.hr