Would you pay more for chocolate and coffee? (I certainly would.)

HSBC Australia, NZ & Global Commodities chief economist, Paul Bloxham, says the prices of certain foods that people love like chocolate, coffee, orange juice, olive oil and certain sweet treats could rise as supplies get hit.

“Sorry to say, but some of the finer things in life are getting more expensive,” he says.

“Get ready for price hikes.”

Why? Many reasons, mostly relating to the impact of climate change and geopolitical factors.

They have been squeezing supply, which has lifted the prices of these ‘finer foods’ and beverages.

First, on cocoa supplies, he notes that the El Niño weather pattern has played a role, delivering wet weather in West Africa.

“Severely wet weather in West Africa, which accounts for three-quarters of world cocoa production, has driven significant supply shortages of this key ingredient.”

“Côte d’Ivoire accounts for 40 per cent of global cocoa exports, while Ghana is 15 per cent, and cocoa crops in both economies have suffered heavy rains, flooding, and disease in 2023. “

As of February, cocoa prices were up 123 per cent year-on-year, spiking to a new record high.

“More recently, the El Niño weather pattern has seen a shift to hotter and drier weather in the region, posing additional risks for the 2024 outlook,” Mr Bloxham notes.

Oranges have been hit by bad weather and disease, he says.

In February, orange juice prices were also up — by 50 per cent year-on-year and 160 per cent above pre-pandemic levels, having reached a record high in November 2023.

“Global reliance on a small number of geographically concentrated producers is also part of the problem, as geographically idiosyncratic weather events can disrupt large shares of production,” he says.

“For orange juice, for instance, Brazil, Mexico and the US account for over 60 per cent of orange juice production, meaning weather events in the region can have implications for global prices.

Climate change is also wreaking havoc for orange juice prices — “cases of ‘citrus greening disease’ also spiked in 2023,” he says.

“This may give consumers around the world few options to avoid higher orange juice prices.”

Likewise, Robusta coffee was up 55 per cent year on year, to a new record high and 178 per cent above pre-pandemic levels.

“The risks climate change poses for coffee have been evident for some time,” he says.

And what about olive oil? This, too, has been affected by adverse weather, especially dry conditions in Europe.

Olive oil prices have risen by 70 per cent over the past year to a new record high.

“In this case dry conditions in Italy, Greece and Spain curtailed supply,” he notes.

And finally what about sugar?

Although sugar prices have fallen back a bit, they are still up 63 per cent above pre-pandemic (2015-2020) levels, Mr Bloxham says.

“Supply-side developments have been in focus here too, with El Niño impacting crops from India and Thailand,” he says.

“India endured its driest August in over a century in 2023, stunting sugarcane crops in the growth phase, while Thailand’s quality and quantity of the sugar harvest also suffered.”

“Inclement weather in India and Thailand, have affected sugar, while weather and the Red Sea disruptions have impacted Robusta coffee supply. “

He says all these supply-side factors are another reason inflation will prove to be “sticky”.