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Coffee prices skyrocket in October after surcharge ban
The price of a cafe coffee in Australia has risen three times faster in the past month than in the last quarter as small businesses grapple with soaring costs.
- Cafes hiked coffee prices three times faster in October than in any other month, in a bid to recoup costs.
- Owners said the ban on card surcharges wasn’t the sole factor, but a tipping point that pushed them to raise prices.
- The average cost of a small flat white in Australia is now $5.16.
The price of a cafe coffee in Australia has risen three times faster in the past month than in the last quarter as small businesses grapple with soaring costs and the end of surcharges on card transactions.
New data compiled by coffee tracking site SmallFlatWhite.com, which analysed more than 68,000 flat white prices at over 18,000 Australian cafes, found about one in five cafes raised prices in October.
The most common price hike was 50 cents, taking the national price of a small flat white to a new average of $5.16.
Chris Drake, creator of SmallFlatWhite.com, said thousands of phone surveys showed cafe owners were struggling with costs.
“Owners say their costs keep rising: wages, super, rent, milk, beans, freight and cups,” Drake said.
“They absorbed their own cost increases until they could not, then raised prices once, usually by 50c.
“Losing the card surcharge on 1 October was the tipping point for some and why we are seeing such a big increase from September to October.”
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Data showed that since April, almost half of cafes charge more than they did previously.
The Northern Territory remained the most expensive place to buy a small flat white at $5.53, followed by South Australia and Tasmania (both at $5.28).
New South Wales was the cheapest state at $5.06, and Sydney was the cheapest capital at $4.95.
Sydney remained the cheapest capital even though nearly one in four Sydney cafes (23 per cent) put prices up in October, the most of any capital.
Small business body sounds the alarm on rising costs
Matthew Addison, chair of the Council of Small Business Organisations Australia (COSBOA), says small businesses are struggling to keep the lights on as discretionary spending falls.
“Australia’s small businesses are being squeezed from every direction, and the consequences are starting to show,” Addison said.
“Rising costs paired with cautious consumer spending as cost-of-living pressures persist are making it harder to keep the doors open.”
Addison argued that sales conditions were tough enough for struggling businesses, and recent government policies have added to the pain.
“The recent backflip over credit card payments for tax bills, the scrapping of card surcharges and changes to capital gains tax and discretionary trusts have added to the uncertainty facing small businesses, leaving owners wondering what might change next,” he said.
“For businesses trying to manage cash flow, plan for the future and make decisions about investment and employment, it’s like juggling balls that keep changing shape and size without warning.”
Topics: Business, Coffee, Cost of Living