Australian coffee drinkers are facing a sustained period of price volatility, as the cost of a standard barista-made cup has risen by 37.5 per cent over the last five years. According to Torrens University data, the average price of a café brew has climbed from $4.50 to $6.50, with some industry projections suggesting costs could reach $12 within the next half-decade. While consumer spending at hospitality venues remains resilient—rising 7.6 per cent over the past year per NAB data—shoppers are becoming increasingly selective about where and when they spend.
The Shift in Consumer Spending Habits
Despite the rising cost of living, Australians have not abandoned the café culture entirely. NAB reports that hospitality spending accounted for one in every $10 of consumer expenditure over the past year. However, the nature of this spending is shifting. Dario Medugorac, NAB head of small business Victoria, notes that consumers are exercising greater caution, prioritizing businesses that demonstrate agility in a tighter economic climate.
Did you know? While many coffee lovers have considered switching to tea to save money, the price of a café-ordered cup of English breakfast tea has also jumped, now ranging between $4.50 and $5.50 compared to $3.50–$4.20 five years ago.
Grocery Inflation Hits Home Brewing
As café prices climb, many consumers have turned to home brewing, yet the supermarket aisle offers little relief from inflation. Data shows that premium coffee bean brands, such as Campos, Vittoria, and Grinders, have seen price increases of 30 to 35 per cent over the past five years. A 1kg bag of these premium beans, which previously retailed between $38 and $45 in 2021, now frequently costs between $56 and $75 at major retailers like Coles and Woolworths.
Instant coffee has experienced an even sharper surge. A 400g jar of Moccona, once priced between $18 and $22, now carries a base price of $37.50. Similarly, Nescafé Gold has seen its base price rise to between $20 and $22 for a 180g jar, representing an increase of 30 per cent to over 50 per cent in some instances.
Global Supply and Future Price Outlook
There is potential for price stabilization in the coming years, driven by changes in global agricultural output. The USDA projects that major exporters—including Brazil, Vietnam, Colombia, and Ethiopia—are on track to increase their output. This aligns with World Bank forecasts, which predict that global Arabica prices will gradually decline through 2027 as supply normalises.
Pro Tip: For the most significant savings, switching to tea remains the most effective strategy. According to data from Yorkshire Tea, the average cost of brewing a cup of tea at home is approximately 10 cents.
Frequently Asked Questions
Why is the price of barista-made coffee increasing?
Coffee prices have risen by 37.5 per cent over the last five years.
Will coffee prices eventually go down?
While the World Bank forecasts a gradual decline in global Arabica prices by 2027 due to increased supply from major exporters, it remains uncertain whether these wholesale reductions will result in lower prices for the end consumer at local Australian cafés.
Are there cheaper alternatives to premium coffee beans?
While premium brands have seen significant price hikes, consumers are increasingly seeking out smaller, more selective purchases or exploring tea as a lower-cost alternative, which costs roughly 10 cents per cup when brewed at home.
Are you changing your daily coffee habits to combat rising costs? Share your thoughts in the comments below or subscribe to our newsletter for more updates on cost-of-living trends.
