DAVE ROSS

Will you change your coffee habit after Starbucks raises prices?

Jul 7, 2015, 9:15 AM | Updated: 9:46 am

Starbucks is raising coffee prices by 1 percent, on average, across the nation. But in the Seattle ...

Starbucks is raising coffee prices by 1 percent, on average, across the nation. But in the Seattle area, it is raising prices by 5-10 percent. (AP)

(AP)

The good news is Seattle’s economy is hot. We are chugging along in the post-recession at a very nice pace.

But everything comes at a price and today, the price you’ll pay is for that morning cup of coffee.

Starbucks has announced it’s raising prices on all of its drinks. Nationwide, prices are going up about 1 percent. But in the greater Seattle area &#8212 King, Pierce, and Snohomish counties &#8212 price hikes will average 5-10 percent.

For example, a tall drip coffee will cost 10 cents more. A tall latte will cost 30 cents more.

The company gave no explanation for the disparity. Though The Seattle Times points out the price increases here match recent wage increases and Seattle did just raise the minimum to $15 per hour.

But CBS Business Analysts Jill Schlessinger thinks this is a typical sign of a recovering economy, and further argues that Starbucks isn’t likely to lose business because of the rising prices.

“What’s fascinating about certain items in our repertoire as Americans is that we will not turn to alternatives, but in other areas we will,” she said, noting a massive price hike in bacon last summer as an example.

“American’s didn’t just go out and pay a lot more for bacon, they just said, ‘I’ll eat something else,'” Schlessinger said. “When it comes to Starbucks, and that is part of your routine and you are used to getting your latte for a certain amount of money every day, you are not going to alter your routine, necessarily, if prices go up a little bit.”

So will customers choose to cross the street to another coffee shop?

“We’ve actually had a pretty pokey recovery and wage growth has been stagnant. There is evidence in certain areas where wages are starting to rise … It’s not widespread, but it’s part of the reason why inflation remains so low,” Schlessinger said.

And those stagnant wages factor in to how businesses will react to the higher prices.

“A lot of companies say, ‘I don’t want to raise my prices, I don’t want to make my customers angry, and I don’t want to basically drive them to my competition,'” Schlessinger said.

Obviously, Starbucks isn’t worried about that. But even if customers do decide to turn their backs on the morning latte, you’re not likely to find lower coffee prices elsewhere.

“Maybe they’re going to stop going to Starbucks because their neighborhood place has a better deal, but my guess is that with Starbucks raising prices, it’s going to be a ‘me-too’ situation,” Schlessinger said. “I think a lot of competitors are going to say, ‘If Starbucks can do it, I’m not going to sell based on price, I’m going to match that price and differentiate myself in another way.'”

So here’s your dose of reality: you’re addicted to caffeine and coffee prices are going up faster than your salary. Guess it’s time to start brewing coffee in your basement bathtub.

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Will you change your coffee habit after Starbucks raises prices?