Starbucks Price Increase Blamed On Rising Costs Despite Falling Coffee Prices

The Starbucks price increase is being blamed on rising costs of doing business.

As previously reported by The Inquisitr, the Starbucks price increase is happening despite the cost of coffee dropping dramatically these past few years. Some people, including the Starbucks CEO, have noticed the cost of doing business will increase under Obamacare, so it’s speculated the Starbucks price increase may be related.

Starbucks spokesman Jim Olson claims the Starbucks price increase is due to “increasing rent, labor and non-coffee commodity costs as well as competitive dynamics.” The Starbucks price increase will not be uniform, although on average prices will increase by one percent nationwide across the United States. The price of your favorite Starbucks drink largely depends on where you live, but in general some drinks are going up by about 10 cents.

Some investors are pointing out the Starbucks price increase may be unfair. Since 2011, the price of coffee beans has dropped like a rock, going from three cents per pound down to around 1.3 cents per pound. That means Starbuck’s major cost of $1.4 billion is almost halved, potentially increasing their profits by $700 million.

But defender of the Starbucks price increase point out that in 1994 the price of Starbucks coffee was $1.25. To put this in perspective, when converted into 2013 dollars that’s $1.96. This means the $1.85 Starbucks price increase for a tall brewed coffee is almost “cheap” in comparison to Starbucks prices from years ago.

The Starbucks price increase comes as Starbucks reported a profit of $390.4 million, up from $309.9 million in 2012. Starbucks overall revenue jumped 11 percent to $3.56 billion.

Do you think the Starbucks price increase is fair?