This is why the price of everything from pints to coffee is hitting £5
When coffee shops in Italy tried to start charging more than €1 for an espresso a few years ago, it practically sparked a revolution. “We cannot allow coffee to become a luxury in Italy,” tweeted Paola Fiocchi Van den Brande in response to a 2022 report suggesting that the price of espresso could go up to €1.50. “It’s not a luxury, it’s a right. Should be free.” She wasn’t the only opponent; “We are receiving numerous complaints denouncing the rise in prices of coffee,” said Furio Truzzi, head of the Italian consumer rights group Assoutenti, at the time.
Consumers have continued to have little truck with attempted price hikes in the intervening years, inflation be damned – despite the fact that the baseline cost of coffee itself plus other materials has risen. “If you go up to €1.80 or €2, you would immediately have no customers, unless you are in a train station or a busy tourist area,” Marco Cappellari, who runs specialist coffee bar Melaleuca in Florence, told The Telegraph in November last year. “Your business would die a very quick death. The people dictate what the price is going to be.”
Here in the UK, we can only dream of a £2 coffee – or, indeed, a £2 anything at this stage. The cost-of-living crisis has seen the incremental, inexorable climb of prices across the board, to the point where it feels like every single item will end up costing a minimum of a fiver.
First off, the humble pint. In April, the average price of a beer is expected to tip over £5 for the first time in UK history. Research by Frontier Economics commissioned by the British Beer and Pub Association (BBPA) predicted that the average pint would hit £5.01, a 21p increase. And, of course, that’s just the average – anyone who’s ever frequented a pub in central London will likely already be well-acquainted with the £7.50 pint.
Then there are the supermarket products which have insidiously crept up and up. Oven pizzas, previously a relatively budget-friendly mid-week treat, have now been gussied up and given a luxe makeover with a £5 minimum price tag to match. In a recent investigation, The Independent struggled to find an iteration for sale cheap enough to get you change from a fiver.
There are plenty of other examples gracing our aisles, too – I was recently absolutely floored by the proliferation of toothpastes for sale at my local Sainsbury’s that inexplicably cost £5 and above.
And finally, of course, there’s that aforementioned coffee. The UK is already up there in terms of the average price we’re expected to pay per cup – £3.38 for a regular cappuccino, according to data from Numbeo, the world's largest cost of living database. But the £5 cappuccino is just around the corner, warn experts. “If we thought that a couple of years ago, we would have laughed at it,” Nicola Lockwood, owner of Bells Tea Shop in Lincoln, told the BBC. “I am in quite a lot of [online] groups with coffee shop owners and the chat there is that £5 for a cup of coffee is going to be the norm. In some places, it’s already hitting that.”
When you factor in extras like syrups, non-dairy milk and extra espresso shots, the fiver-coffee is indeed a material possibility for some consumers, confirms market research firm Allegra World Coffee Portal. “I remember 20 years ago, we were worried about the tipping point being £2,” says founder and CEO Jeffrey Young. “Here we are now talking about the £5 cup of coffee. Realistically, for the average consumer, it’s two or three years away, but for many it is the reality now.”
This isn’t down to greed on the part of your local independent coffee shop; a plethora of factors are pushing prices sky high. Coffee on international commodity markets hit its highest prices on record in December 2024, while the cost of arabica beans soared by more than 80 per cent last year due to increased labour and energy costs, plus bad weather shrinking crops in Brazil and Vietnam.
But UK government policy is also massively increasing overheads. Staffing costs are increasing substantially overnight: from 1 April, the national minimum wage is going up from £6.40, £8.60 or £11.44 per hour (for those aged under 18, 18-20, or 21 and over respectively) to £7.55, £10 or £12.21. This rise is being coupled with a significant uptick in national insurance contributions (NICs). Employers currently pay 13.8 per cent on any earnings an employee makes over the threshold of £9,100 per year. From 6 April, however, the rate jumps to 15 per cent, while the threshold at which employers start paying NICs drops to £5,000 annually.
The final nail in the affordability coffin is Labour’s decision to decrease the discount on business rates that hospitality businesses enjoy – they’re dropping from 75 to 40 per cent in the new tax year.
We don’t want to even charge £4 for a coffee, let alone £5, but the margins have reduced so much
Ollie, the proprietor of my favourite local café in Folkestone, paints a bleak picture of the challenges faced by small business owners. “The price of everything is going up – liability cover, electricity, coffee – and there doesn’t seem to be any scope for it slowing down,” he says. “It’s kind of terrifying. You ask yourself, where does it stop?” The change to staffing costs is set to severely impact his profit margins, already notoriously slim in the hospitality industry. Ollie pays employees the real living wage – a UK wage rate based on the cost of living that is not legally required but that businesses can voluntarily opt into – which is currently set at £13.85. “By the time you add on holiday pay, sick pay and everything, you’re looking paying £17 to £18 an hour,” he says.
Borrowing rates are also sky high; when the café looked into getting a loan to buy a new £2,000 coffee grinder, they found it simply wasn’t feasible. “We don’t want to even charge £4 for a coffee, let alone £5,” Ollie adds. “But the margins have reduced so much that if anything happens…”
Pubs are in a similar position thanks to the upcoming spiralling of staffing costs and business rate hikes. The biggest companies may be able to absorb the increase, but in most cases your local will have no choice but to pass it along to the customer and charge more for drinks. The alternative seems to be shutting up shop; in 2024, more than 400 pubs in England and Wales permanently closed, reducing the total number of pubs to under 39,000 for the first time, according to an analysis of government figures by Altus Group.
Estimates by British Beer and Pub Association (BBPA) put the additional NICs paid by pubs from April at £71m, while the increase in business rates will cost £215m more for the 2025-26 tax year, says Altus Group.
Aside from pints, you may have also noticed the price of a glass of wine or a G&T rocket – this is in part a result of the new alcohol duty system, introduced from 1 February 2025, which stipulates that taxes on wine and spirits are calculated based on alcohol strength. Duty on a bottle of 14.5 per cent ABV (alcohol by volume) red wine and a bottle of gin rose by 54p and 32p respectively.
When it comes to supermarket products, prices have also continued rising swiftly: figures released in January revealed the cost of buying groceries had jumped 3.3 per cent year-on-year. Plenty of staples got more expensive, with stark spikes for items including instant coffee (21 per cent), butter (18 per cent) and olive oil (17 per cent). Food inflation, currently 2.5 per cent, has been a significant factor in recent years, with modelling by the British Retail Consortium forecasting that food prices will continue to increase by 4.2 per cent on average in the latter half of this year. Costs, already impacted by geopolitics, harvest issues as a result of climate change and supply chain pressures, are being hammered further by rising energy bills and higher labour costs – with this last set to increase further from April in line with the incoming government policies.
The UK is not the only country to be affected by escalating prices, of course. But, in some nations at least, consumers are taking matters into their own hands. In March, thousands of people across Sweden staged a week-long boycott of supermarkets in response to the biggest food price rise in two years, reports The Guardian. It follows similar cost-of-living boycotts in Bulgaria, Croatia, Bosnia and Herzegovina, Montenegro and Serbia over the past few months.
Perhaps Brits need to start doing likewise and voting with our wallets. Or else start girding ourselves for the inevitable, horrifying prospect of the £5 tea…
