Inflation’s impact on coffee prices gives small business owner grounds for concern

Genevieve Beauchemin looks at the new numbers that inflation rose by 2.4 per cent in December and what it means as Canadians seek cost relief.

The large increase in the cost of coffee is a big portion of the annual inflation rate for grocery products across the country. For Stephanie Presta, the steeper price is an added challenge.

Presta is a self-styled coffee nerd, running MTL Latte Heart, a home business which now combines her passion for coffee and baking. She says it started as her selling bags of roasted coffee in Montreal.

“From my passion for coffee came cookies,” she said. “I infuse my cookies with coffee, and it really enhances the flavours.”

But now, it’s a recipe for incurring higher costs. The latest Statistics Canada inflation numbers show the price of coffee went up 30 per cent year over year.

Economist Colin Mang says several factors are to blame for that rise.

“Weather variability and lower yields means that there are less coffee beans being produced and there is more global demand,” said Mang. “That is driving up the prices.”

A similar story has unfolded for beef prices, which StatCan reported were 16 per cent higher. Mang says issues emerged years ago, after a drought in the Prairies led to an increase in cattle-feed prices, which resulted in farmers selling off more of their cattle.

“That’s left us with the smallest Canadian cattle stock right now than we have had since 1989,” he said. “The challenge that we now face is that there is just not enough beef supply. And that is driving up beef prices.”

The rise in coffee and beef prices contributed, in large part, to the five per cent annual increase for grocery items. While that rate of inflation still hits home for consumers, some economists see positive signs in the overall report.

“If you take if you take out beef and some of the secondary effects on proteins, and you take out coffee and a couple of other products that have had extreme weather issues, (the) news is relatively optimistic for food prices, going forward,” said Guelph University professor Mike von Massow.

For Presta, relief from rising prices could mean investing in her passions is worth all the hard work she has put into her business. She says her cookies are selling like hotcakes, baking and selling 600 boxes of six cookies each over the holiday season.

“High costs definitely impact my business,” she said. “I don’t want to expand and get a physical space to do business. That would increase the costs even more, and that would mean raising the cost of the cookies, or the amount I am getting back, at the end of the day.”

And with the price of a restaurant outing also going up, it makes the search for a sweet treat at a sweet price harder to find.