The price of coffee imports to the United States has risen over 300% since 2020 lows (From roughly $80/bag in 2020 $368 today as of September 24th 2025).
Prices were relatively stable in previous years but have been rising dramatically since 2021.
So, what’s causing this?
Most mainstream media narratives around this subject have blamed things like Climate Change, High Demand, Low Supply, Supply chain disruptions, and Rising production costs. Which I believe all has some truth to it, but these issues are constant throughout history and don’t typically cause 300%+ inflationary pressure on prices.
So, what’s really driving pricing volatility?
My theory is that the main drivers are a series of catastrophic, top-down authoritative decisions made by governments around the world. They locked down economies in 2020, which stopped production and restricted supply, at the same time USD was inflated at the highest rate in history. The M2 money supply paints the inflationary picture (M2 money supply is a figure which calculates the total USD in circulation at any given time.)
These two top-down decisions created inflation on coffee prices like we’ve never seen before in history. Demand didn’t just magically disappear, but supply did, and our government spent money faster than any time in recorded history at the same time, which lowered the value of our currency relative to all products, including coffee. This is why you see the price of EVERYTHING going up.
The economic theory supporting my analysis is based on the bullwhip effect in the supply chain. The bullwhip effect is used to describe the phenomenon in supply chain management where small changes in supply or demand lead to bigger changes in orders placed by suppliers. As consumer orders are communicated upstream, each stage tends to overreact, exaggerating the demand signal. This distortion results in erratic ordering patterns, excess inventory, and increased costs. It can, and will, take many years for the supply chain disruptions and M2 inflation to normalize based on this theory.
Yes, climate is changing, but the climate is always changing, and it’s never caused 300% inflation in the past. So I don’t buy that excuse.
Demand was obscured via lockdowns, supply was disrupted, and money was printed. THAT is the real cause.
If you look back on the first chart showing coffee import prices, you can see the market starting to find a new normal a few years after 2020, and now we are facing more supply chain disruptions in the form of Tariffs, which is re-engaging the bullwhip effect yet again.
So, what does this mean for the future of coffee prices?
In my opinion, it means we are in the bubble of all bubbles. These prices are not sustainable, tariffs are artificially inflating current pricing models, and eventually this bubble is going to pop. I guess if you want to look at the bright side, If this inflationary bubble eventually does pops, we could finally see some downward pressure on prices and some retail relief in the future.
Thanks for reading!
Written by Nicolas Milone of Foxen Coffee.
