Coffee prices increase across the country

By Scott Curkin; Eyewitness NewsTARRYTOWN, New York (WABC) -- We all know that folks are paying a lot more to fuel up these days, not just for gas but for coffee too.

In fact coffee price increases have outpaced gas prices in the past year.

While fuel prices are expected to stabilize, coffee could continue to rise.

A batch of espresso blend coffee beans fresh out of the roaster piping hot and $2 more per pound than last year. At coffee labs in Tarrytown, they've had no choice but to pass along rising costs to their customers.

The jump in price of unroasted coffee beans known as green coffee isn't limited to specialty shops or exotic blends. Smucker the company that distributes Folgers and Dunkin Donuts brand coffee in supermarkets is raising what it charges retailers 11percent.

Reasons vary from speculators driving up costs to harsh winters limiting supply.

Experts say it's unlikely prices will drop anytime soon. But for many, coffee is as much a necessity as milk or bread.

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Coffee drinkers keep chugging, as prices rise

  NEW YORK -- People are paying more to fuel up these days - on coffee.

Coffee price increases have outpaced even the hike in gasoline prices the past year. A one-pound can of ground coffee sold for $5.10 in April, up 40 percent from $3.64 the year before, according to the Department of Labor. By comparison, a gallon of regular gasoline cost $3.83 on average on Tuesday, up 37 percent from a year earlier.

And while fuel prices are expected to stabilize, coffee increases could continue for some time because the prices that coffee companies pay for unroasted beans are still climbing - fast.

Coffee futures were trading for $2.61 per pound Tuesday, roughly double a year earlier.

J.M. Smucker Co., the maker of grocery store stalwart Folgers and of packaged varieties of Dunkin' Donuts coffee, said Tuesday that it is raising prices of most of its U.S. coffee products by 11 percent, its fourth increase in a year. Kraft Foods Inc., Peet's Coffee and Tea Inc. and Green Mountain Coffee Roasters Inc. have also recently hiked their prices for coffee.

Starbucks Corp. also said Tuesday that it will raise prices on packaged coffee in its stores by an average of 17 percent in the U.S. and 6 percent in Canada. That follows a 4 percent increase in 2009, and a second increase just two months ago.

But the drink remains essential to many.

Eboney and Tyson Owens say they've noticed higher coffee prices.

The couple aren't about to give up their buzz, but they're buying different brands depending on what costs least among their top four preferred brands - Starbucks, Dunkin' Donuts, Godiva and Seattle's Best.

"I'm a Starbucks fan, I swear by it," Eboney Owens, 32, said during a recent grocery trip in Portland, Ore.

However, if something else is on sale or has a coupon available, she'll switch.

"We won't go bottom of the barrel, though," Tyson Owens, 31, added.

Overall coffee crops increased 8 percent last year, according to the International Coffee Organization, helped by strong supplies from Ethiopia, the Ivory Coast and other countries. But this year, some major exporters, including Indonesia, are suffering from smaller crops because of drought, flooding or other inclement weather, which is affecting prices. The rise in coffee prices also has roots in the economic growth of China, where an upwardly mobile work force is fueling demand.

Unlike many other discretionary items, coffee usually emerges from a recession relatively unscathed, economists say. That's because when money is tight, people may buy cheaper brands of coffee, but they won't give it up completely. Americans consumed 21.7 million 60-kilogram bags of coffee in 2008, during the depths of the recession, up from 21 million the year before, according to the ICO. That's nearly 2.9 billion pounds of coffee.

Coffee is part of a bigger story about rising prices for household staples as diverse as food, clothing, diapers and batteries. Food prices soared 5.5 percent in 2008, then ticked up a slower 1.8 percent in 2009 and 0.8 percent in 2010 as meat and produce prices steadied. But in recent months oil and grain prices have soared, sending global food prices to their highest point in 20 years, according to the UN's Food and Agriculture Organization.

Labor Department data showed that food prices in the U.S. increased 0.8 percent in March, the largest monthly increase in nearly three years. The pace slowed to a 0.4 percent increase in April.

U.S. Department of Agriculture economist Ricky Volpe notes that food price inflation was much higher in the '70s, when year-over-year increases averaged 8.1 percent. While food price increases are far below that, more are expected. In the most recent quarter, 89 percent of consumer product makers tracked by FactSet said they have raised some prices or have plans to do so.

Sara Lee Corp., which sells Maison du CafDe, L'Or and CafDe Pilao, said this winter that rising green coffee costs led it to raise its prices. Kraft, which sells Maxwell House coffee, cited rising coffee prices in a broad price hike it levied this winter. Peet's Coffee and Tea Inc. has raised its retail prices twice recently in response to raw material costs.

Starbucks said Tuesday that it has been continually monitoring the costs of green coffee, fuel and other operational costs and has made price adjustments as needed. A one-pound bag of coffee currently goes for $9.95 to $13.95 in stores. After it puts the latest price changes in place, the price will jump to between $11.95 and $14.95 a pound.

Smucker said that its latest price increase includes Smucker's Millstone and Folgers Gourmet Selections packaged coffees. For the Dunkin' Donuts brand, the increase affects only packaged coffee sold in grocery, club, drug and general-merchandise stores. Items sold at Dunkin' Donuts shops are not Smucker products.

The company also raised coffee prices by 10 percent in February, 9 percent in August 2010 and 4 percent last May.

The cost increases haven't deterred Smucker from expanding its U.S. coffee portfolio. It announced last week that it purchased privately held Rowland Coffee Roasters Inc. for $360 million in cash. Rowland, based in Miami, sells Cafe Bustelo and Cafe Pilon, which are sold primarily in the Northeastern U.S. and South Florida and target Latino shoppers. Rowland is a leading producer of espresso coffee in the U.S.

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Sarah Skidmore in Portland and Michelle Chapman in New York contributed to this report.

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High used-car prices make it ideal time to sell

Used cars fill the lot outside the Karp auto dealership in Rockville Centre, N.Y., Thursday, Nov. 8, 2001. In a little-noticed effect of last month's surge in new car sales, consumers traded in far more used cars and trucks than usual, sending values plummeting and leading to inventory surpluses that will take some dealers months to sell. ((AP Photo/Rich Kareckas))

  By TOM KRISHERDETROIT -- It's the best time in years to sell your car.

People are holding on to cars and trucks for about a year longer than they did before the recession, which has created a tight supply of used vehicles. So few are on the market that prices have risen to their highest in at least 16 years.

Dealers are paying an average of $11,660 for a used car or truck, up almost 30 percent since December 2008.

"You're not going to find a situation like this very often," says Jonathan Banks, executive auto analyst for the National Automobile Dealers Association used car pricing guide.

The run-up in prices for used cars has been so dramatic that it almost doesn't make sense to buy them anymore, says David Whiston, an auto analyst for Morningstar. That's probably a good indication that prices are at or near a peak.

"For just a little bit more I can buy a brand-new car," he says. "There's a tipping point. I think we are getting very close to seeing that."

Take the Honda Accord, known for reliability and holding its value. A dealer would sell a 2008 four-cylinder Accord LX sedan in good condition with about 45,000 miles on it for $16,175.

With no down payment and a loan at 5 percent interest, it would cost $373 a month to pay off the Accord in four years. But Honda is offering a three-year lease on a new 2011 Accord for just $250 a month. The company will even make the first payment. You still have to pay $600 up front and 15 cents for each mile you drive over 12,000 a year.

In Greensboro, N.C., Jeremy Barnes and his wife are expecting their first child, so they decided to replace a white 2007 Accord with a bigger, new vehicle. He wasn't sure what they could get for the Accord when he checked prices on the Kelley Blue Book website.

"I was pleasantly surprised," says Barnes, 30, a heating and air conditioning equipment salesman.

He's asking $15,200 for the car, which is in good shape and has 47,000 miles on it. While waiting for a buyer, the couple are looking at vehicles like the Jeep Grand Cherokee.

The rise in used-car prices is a byproduct of the recession. The average car on the road now is 10.6 years old, according to the Polk research firm. That's up from 9.8 years in the middle of 2007, a few months before the recession struck and people began to rethink major purchases.

Another source of used cars got choked off when credit tightened during the 2008 financial crisis and car companies cut back on leasing new ones. Companies sell leased cars as used when leases expire.

Japan's earthquake and tsunami are also driving up the price of some used cars. New models of some small cars, such as the Toyota Prius and Honda Fit, are expected to be in short supply. Dealers are buying used ones to sell in their place. That won't last, though.

Manheim, a big auction house where dealers buy used cars, says prices this year are the highest since the company began collecting data in 1995. Tom Webb, chief economist there, predicts that used-car prices will rise for around two more months and then level off. They may fall in 2012 and beyond as more used cars come on the market.

There are already signs that used-car prices will come down. Leasing was 21 percent of U.S. sales in February, which was up from 11 percent in 2009, according to Experian Automotive. That should bring more used cars onto the market as three-year leases end.

Banks and auto company finance arms have also loosened up credit for people with poorer credit ratings, meaning more buyers can get a loan for a new car.

(Copyright ©2011 by The Associated Press. All Rights Reserved.)
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Rising food and gas costs push up consumer prices

  WASHINGTON D.C. -- Consumers paid more for gas and food in April, lifting inflation to its highest level in two and a half years. But inflationary pressures have begun to ease this month, and analysts say some prices could taper off by summer.

The Consumer Price Index increased 0.4 percent in April, the Labor Department said. In the past 12 months, prices have risen 3.2 percent. That's the biggest year-over-year gain since November 2007 through October 2008.

Excluding volatile food and energy, which account for about 20 percent of the CPI, the index increased 0.2 percent in April and has risen 1.3 percent over the past 12 months. That's still below the level the Federal Reserve considers a healthy pace of inflation.

Economists like to study costs outside food and energy - the so-called "core" prices - to see long-term trends. Food and energy can rise or fall sharply from month to month.

The cost of new and used cars, clothing and medical care all increased, pushing up the core index. Car prices likely increased because of temporary parts shortages caused by the March 11 earthquake and tsunami in Japan. Most other prices were subdued.

Oil has fallen from $114 a barrel earlier this month to about $100 Friday. Prices of corn and other grains have also declined in recent days Economists say gas and food prices should fall later this year.

High prices are likely slowing the economy this quarter. But growth should increase in the second half of this year, they say.

"With commodity prices now dropping back, it looks like inflation is close to peaking," said Paul Ashworth, chief U.S.

economist for Capital Economics. He says year-over-year inflation should climb to 3.5 percent before dropping in the second half of the year.

Cary Leahey, an economist at Decision Economics, said yearly inflation figures should start to decline in the next several months, although core prices should continue to rise. The Federal Reserve won't need to start raising interest rates until next year to keep inflation in check, he said.

The price of gasoline rose 3.3 percent in April. That accounted for half of last month's increase. Gas has risen more than 33 percent in the past year because of demand in fast-growing developing countries and political turmoil in the Middle East.

Gasoline is averaging $3.98 a gallon nationwide, up $1.09 from last year.

Food prices increased 0.4 percent last month. That was half the previous month's increase, which was the largest in nearly three years. The price of fresh vegetables fell. Dairy, meat, fish and eggs all rose.

Federal Reserve Chairman Ben Bernanke has said that the impact of higher food and gas prices should be temporary. The central bank has also said it is watching closely for any signs of inflation.

Last October, the core index had risen only 0.6 percent in a year, and the Fed was more concerned about falling prices. That increase was the smallest for 12 months since the core index was created in 1957.

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