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Get ready for higher coffee prices at the grocery store

Wholesale coffee prices have shot up to a two-year high due to a drought in Brazil, where a third of the world's coffee is grown
Coffee prices hit two-year high 01:24

A perfect storm is brewing for coffee lovers, who may soon be paying through the nose for their morning joe.

Prices for arabica coffee jumped to a two-year high in the futures market earlier this month, thanks to a severe drought in Brazil. That means production in the country, which produces a third of the world's coffee, will be 18 percent lower than forecast, according to Bloomberg News.

So far, consumers have been mostly shielded from higher prices because big roasters buy their beans far in advance, while Starbucks (SBUX) has locked in prices. But given hard-hit coffee growers and rising futures prices, it's only a matter of time before those costs percolate to your local grocery store and coffee shops.

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"We're likely to see coffee prices move upwards anywhere from 20 to 25 percent on mainstream grocery channels," Ross Colbert, global strategist for beverages at Rabobank International, told CBS News.

Some coffee stores are already feeling the heat.

"Our espresso went up 7 percent in a week," Peter Crippen, the owner of New York's Rex coffee shop, said. "If it went up another 7 percent we'd have to raise prices."

That may hit some coffee-addicted consumers hard. After all, specially brewed coffee is already pricey at many high-end shops.

Take a look at Budin, a Brooklyn cafe that the New York Daily News in February said had set a new record for the most expensive espresso drink in New York, at $7 per cup. The coffee isn't just any old brew, of course. It uses Ethiopian-grown beans roasted in Norway, along with Danish anise syrup and raw licorice powder. But Budin quickly raised the price to $10 per cup after running low on supplies and seeing strong demand.

Still, consumers are likely to see higher prices at the supermarket first, The Wall Street Journal notes, because coffee shops can stave off price hikes longer, given that the cost of beans is a smaller part of their expenses.

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