The price of a cup of coffee in Perth has stagnated in line with its spluttering economy – while the eastern capital city markets are steaming ahead.

July 20, 2015

Perth’s notoriously high coffee prices have stagnated in line with its spluttering economy, while the cost of a cup of black brew is likely to steam ahead in the stronger eastern capital city markets.

A survey of standard cappuccino prices shows prices have risen by an average of almost 12 per cent since 2010; with Melbourne, Brisbane and Sydney recording the biggest rises.

Perth still has the highest-priced coffee, according to the Coffee Economist’s cappuccino price index which is based on data collected from 1100 cafes, although it is fast coming back to the field.

“It was thought coffee prices were the best indicator of the stress WA was going through,” AMP Capital chief economist Shane Oliver said.

“Now the two-speed economy has reversed and everything that went with that, including coffee price movements, has reversed.”

Mr Oliver said cafe prices were linked to factors such as shop rents, staff wages, what a customer can afford to pay and the cost of the coffee beans. He said that increased vacancies and the end of wages pressures in WA meant prices should stagnate or decline, while NSW and Victoria would experience price rises.

Perth residents still pay the most for a standard cappuccino, at $3.89, although that is the same price they were paying in 2013.

Freddy Parsons, owner of Higher Grounds in Perth city said, the end of the mining boom had resulted in a plateau for coffee prices.

“I’m glad the price growth has slowed, I don’t want to see people paying $7.50 for a cup of coffee,” Mr Parsons said. “With business slowing and growing unemployment in WA perhaps people will have more time to drink coffee. We’re not worried about growth in the per cup price, we’re more interested in people enjoying coffee in greater numbers.”

Brisbane has the second most costly coffee, at $3.74, while Hobart is close behind at $3.71.

Coffee cheapest in Sydney.

The battle between Sydney and Melbourne was decisively won by the harbour city where $3.32 buys the nation’s cheapest cappuccino.

In Melbourne you’ll need an extra 26¢.

I think Melbourne’s average cup price is higher than Sydney’s because we’ve got a more established and developed coffee market.Troy Benjamin, T-Roy Browns

The country’s second most populous city had experienced the nation’s greatest price increase for a cappuccino at 12 per cent over the past five years.

Troy Benjamin, owner of T-Roy Browns in Melbourne, said that growth in the average per cup price in the southern city was due to the increasing demand for speciality coffee.

“I think Melbourne’s average cup price is higher than Sydney’s because we’ve got a more established and developed coffee market.”

Paul Geshos of Mecca Coffee in Sydney said he wasn’t worried about the average price of a cup of coffee.

“Price isn’t an indication of whether it’s going to be good or not,” Mr Geshos said. “You can buy an amazing cup of coffee for $4 and you can also buy a terrible cup for the same price.”

Mr Geshos said that the cost of running a business in Sydney had increased at a greater rate than the growth in price of a cappuccino.

Arabica bean prices – the predominant bean used in cafes, as opposed to Robusta beans – are trading about 20 per cent lower than what they were 12 months ago, according to US dollar per kilo data.