Business News

Cause of Starbuck’s Price Hike

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Last Updated: Jan 16, 2016

Starbucks has just implemented its price hike, which it announced a week ago. The prices of some drinks will increase by a nickel to as much as 20 cents, while the packaged coffee you find in grocery stores will increase in price by $1 to as much as $9.99 a bag next month.

Starbuck’s Price Hike JM Smuckers and Folgers also have price hikes last month. This makes it easier for people to think that there is another inflation, which puts American consumers to the disadvantage leading to lower quality of life due to low interest rates.

Yes, South America has been hit by drought, but it is not as badly hit as people think. This is not the main reason for the price hike.

There are two kinds of consumer inflation: the baseline corporate subsistence inflation and the collective prosperity tax. The first type is when producers are forced to increase their prices to keep up with their overhead expenses, while the second type of consumer inflation is where companies raise prices because they can and customers will still pay. The second type is also considered as capitalism. Starbuck’s price hike is the latter.

Their price hike isn’t across the board, coffee is only 10 percent of its operating costs, and it will only affect 20percent of the coffee company’s customers. This means, they are not forced to raise prices, they are increasing the prices because they simply can.

Venti size lovers will still pay for their coffee despite this collective prosperity tax price hike. This may not be pleasing to the ears and your taste buds, but that is what you have to pay for if you want quality coffee. If there will no longer be cheap coffee, then that is inflation. For now, you just have to do with this price hike, which is more like paying for a luxury cup tax.

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