Say It Ain't So Joe: Starbucks Raises Coffee Prices

Drought in Brazil behind the boost.
4:11 | 06/24/14

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Transcript for Say It Ain't So Joe: Starbucks Raises Coffee Prices
You lose. It's Tuesday June 24 Wall Street is open for business here at new York and two -- big numbers are five to 25 cents. That's much more. Will be -- starting today for their morning afternoon and evening caps of the coffee. At this ubiquitous corner coffee joint hello everyone I'm Michelle Franzen -- New York. Hewlett all the details Jeff -- of Yahoo! finance good morning Jeff I've got my coffee with me. -- accords are not -- party -- like a gallon of mine so I guess we're good at the government. Our all revved up from right to talk about I'm taking a bold stance -- as that I don't think Starbucks raising prices is a sign of inflation run -- the end of the world. Consumers getting gouged or anything nearly -- out I think it's merely an example of capitalism Starbucks. Now -- it's getting all the headlines at they're jacking up Austin and this is the most recent price to be raised on the longer -- lines. But they're only doing it on stuff that were addicted to you can still get Starbucks food for the same price K accounts where Starbucks is fighting tooth and nail for market share. There are changing the price of that. They're simply raising prices. Back to 2013. Level on price on certain product that -- got a lawyer and a buy out on stuff they know you're gonna buy and and that really is the key here it's just. You know -- it's -- prosperity tax. All right so let's break down the capitalism -- last -- Starbucks gives all their employees a free college education this week -- -- those prices that do you think there's any connection with that. Now the companies -- there's not an. I didn't -- pretty much believe them I think really Arizona State was. Going to be put in a bail on a lot of those scholarship costs. And the incremental cost of getting your degree on line is pretty much nothing and so there's a big difference in what ASU charges students. And what Starbucks and actually have to pay to send their workers to get that degree. And so that -- I don't think these costs are connected in fact only 10% of Starbucks operating costs are really linked to coffee at all. This is something that's a discretionary price hike. And it only again goes back to where prices were over Starbucks coffee -- April of last year I think they're doing it because the market will bear it. And to be fair of course prices on Folgers and Dunkin' Donuts coffee went up 9% a couple of months back so that shouldn't be. Quite a huge surprise that Starbucks is raising its prices wow. Right in and all three of those companies cited the coffee commodity. And what happens kind of an interesting thing I -- -- -- to -- the weeds here but there was a drought in South America that was supposed to. Impact the coffee -- the commodity itself and terms of production much more adversely than it did and -- we've seen in the commodity pits as the president probably spiked. And now what's come down some 20%. I doubt any of those companies are going to lower the price of property in the supermarket as a result of those prices creeping back to normal. And if you look at it over the last five years prices of property are still. By the -- to be by the commodity health what they were five years ago so this is not inflation run -- -- this is. I'm slightly more prosperous America willing to pay whatever it takes to get our -- fixed. And of course you mentioned at the price -- could be blamed on that drought but also capitalism doesn't mean that when the rain starts to come down the prices were also follow I -- you -- you don't think so. And then are more people drinking coffee these days. Well it. Ed some red some people get their -- wherever gonna get a were trying to lean towards -- Starbucks being incredibly through realizes that the only caffeinated beverage. More popular worldwide basis -- coffee is -- So they're -- -- T and static coffee and build presented as kind of a selection but whether you're getting it through your energy drink for your T -- coffee. We're just kind of a caffeinated nation and we'd like it that way it speeds this up in the morning. And you know what if you don't want to pay these prices and it turns out that your body doesn't really need caffeine you can always just quit. Which don't tell people that they don't. MacKey from Yahoo! finance thanks for joining us. QU. A can of course keep up with the latest headlines right here on abcnews.com. Even watching the big number I'm Michelle Franzen and New York.

This transcript has been automatically generated and may not be 100% accurate.

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