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Price of flat white set to top £4 as rising costs push inflation back to 40-year high

20/10/2022
Robi Lambie, co-owner of Cairngorm Coffee Roasters
  • Experts warn of ‘ludicrous’ price hikes as cost of milk hits all-time high
  • Coffee shops forced to pass soaring cost onto customers amid concerns buying a takeaway coffee will become a ‘luxury lifestyle decision’
  • Warning comes as leading a Scottish wholesaler describes ‘perfect storm’ of price rises, strike disruption, and rising energy costs facing the hospitality this winter 

INDUSTRY figures have warned the cost of a flat white coffee on the high street is set to top £4 for the first time as inflation returns to a 40-year high. 

The soaring price of milk – which is at its highest level on record – is forcing businesses to bump up prices, with high costs being passed on to customers. 

The price of a flat white topped £3 at UK chains for the first time ever in August, and now experts predict prices are set to jump by more than a third before the end of the year. 

Robi Lambie, coffee roaster and co-founder of Cairngorm Coffee in Edinburgh, said: “We’re very concerned about the impact of inflation on our business. 

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“One worry we have is that rising costs could push the price of coffee into a bracket where customers decide it’s more of a luxury lifestyle decision, rather than everyday morning essential. 

“With everything considered, we predict the price of a flat white coffee will be at least £4 by the end of the year. It sounds ludicrous, but it’s the position we’re likely to find ourselves in.”

The average price of a pint of milk in August was 62p – the highest since records began in 1971.

Lambie continued: “Milk has been significantly undervalued for some time now, so the increase brings it into line with a more realistic price point. 

“That does, however, mean margins are tightened and the cost passed on to the customer becomes higher.” 

The roastery has seen an increase in the number of customers signing up to its coffee subscription service, as cofficionados choose to enjoy the brew at home, rather than spending extra on a takeaway cup. 

“We’re fortunate our business has several layers – including selling our roasted coffee beans to customers who want to drink it at home – but we still have concerns heading into the winter,” Lambie added. 

“We rely on gas to roast our coffee, and despite the introduction of an energy price cap for businesses, we’re still worried about rising costs.

“While it’s good to have some certainty, it’s still a cap on prices that are significantly higher than last year.”

Inflation rose to 10.1% in the 12 months to September according to the Office of National Statistics – above the expectations of economists, who had predicted a figure of 10%. 

Food and non-alcoholic drinks prices rose significantly, climbing by 14.5% in twelve months. 

Julie Dunn, operations director at Dunns Food and Drinks, a wholesaler with more than 2,000 customers across Scotland, has warned the nation’s hospitality sector faces “a perfect storm of price rises, strike disruption, and rising energy costs.”  

She said: “Despite venues preparing for what is likely to be an incredibly busy festive period, rising food costs, strike disruption and increasing energy bills are going to be a huge concern for bars, pubs and restaurants across the country.

“In the last year alone, we’ve seen wholesale costs jump by around 10% on average each quarter, with the price of dairy products, such as butter and cheese, at an all-time high.

“With rising costs inevitably being passed on to customers, the likelihood is people will be less willing to spend on luxuries like eating out. When the festivities come to an end in January, hospitality venues are set to experience a very quiet start to the year. “We continue to do everything we can to support our customers during price fluctuations by providing a wide range of affordable options to help keep costs down.”

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