Despite Claims it Would Lower Costs, Some Cafes Begin to Increase Coffee Prices Following a Ban on Credit Card Surcharges in Australia – CoffeeTalk

Recent data indicates that approximately 10% of cafés in Australia have increased their coffee prices by up to 35 cents since the banning of credit card surcharges on October 1. This is contrary to Prime Minister Anthony Albanese’s assertion that the ban would lower item prices, including coffee. According to an analysis from the ordering app Hey You and Westpac DataX, the average price of a coffee rose by 3 to 4 cents, with the average cost of a regular latte, flat white, or cappuccino climbing from $5.02 to $5.05, marking a 0.7% increase.

Prior to the surcharge ban, coffee prices had already been on an upward trend, particularly from late 2021 through 2022, and this trend is expected to continue into 2026. Geographically, New South Wales saw the largest price adjustments, with 11.5% of cafés raising prices, compared to 8% in Victoria. However, Hey You’s chief executive Asheesh Chacko stated that 90% of cafés have not altered their prices, highlighting that those that did raise prices were already dealing with escalating costs related to milk, beans, and wages.

In a typical trading month, about 4% of cafés typically increase latte prices by an average of 0.3%, but this figure has more than doubled since the surcharge ban. When cafés chose to adjust their prices, many opted for rounder figures: 39% raised prices by 50 cents or more, 21% by 30 to 45 cents, 24% by 20 to 25 cents, and 16% by 10 to 15 cents.

Future price hikes are anticipated as café owners conduct quarterly reviews and await updates to their point-of-sale systems, especially given that international wholesale coffee bean prices spiked due to severe weather conditions in major coffee-producing nations. Additionally, rising costs for local ingredients, including milk and packaging, as well as operational pressures such as labor costs and increased electricity bills, have increased the expense of running a café. Surveys indicate that the average Australian café operates on a narrow profit margin of 3-5%, meaning even slight cost increases can lead cafés to raise menu prices to remain viable.

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