| With all the trade-war uncertainty lately, you may need an extra caffeine fix to get though news-heavy days. But you also might be wondering to what extent a big rally in coffee prices will filter through to cafes and supermarkets. Coffee futures have surged over the past year — high-end arabica beans doubled to a record high — amid unfavorable weather in key growers Brazil and Vietnam. The crunch could last a while yet, with major trader Volcafe expecting supplies to trail demand for a fifth straight season. Consumers are already feeling the impact. They’ve seen roasters pass on costs, subscriptions for “free” drinks being scrapped, and even found empty supermarket shelves in parts of Europe as retailers push back against more expensive supply deals. As Bloomberg Opinion’s Javier Blas says in this video, the cost of a cup of coffee could rise further in the months ahead. It’s difficult to know exactly how big the impact will be on consumers, but the United Nations’ Food and Agriculture Organization has run a preliminary analysis of how long it takes for costs to affect retail prices, and by how much. It suggests that in the EU, a 1% increase in international coffee prices leads to a 0.24% rise in the retail price after 19 months, with the shock persisting for at least four years. For the US, it causes a 0.2% increase after 13 months, the agency said in a report. While it’s too early to collect a representative and up-to-date sample of prices at the retail level, early evidence shows that prices in the US and EU in December were up 6.6% and 3.8%, respectively, compared with the same period a year earlier, the FAO said. The FAO also said that it’s unlikely that coffee consumption in both markets will drop significantly, given the inelastic demand response. In other words, we’re too hooked on coffee to cut back too easily. Food trade war latest: - US President Donald Trump threatened to enact a 200% tariff on European wine, champagne and other alcoholic beverages.
- His administration hit out at Japan’s elevated rice tariffs, signaling that the grain and Tokyo will likely be targeted as the US seeks to apply reciprocal tariffs in the coming weeks.
- Celebrity-backed tequila brands, many of which lack supply chain expertise and negotiating power, may be hit the hardest by tariffs.
- Europe’s animal feed industry has warned of supply challenges if US soybeans are hit in the escalating trade war.
—Agnieszka de Sousa in London | 
