Keeping a lid on the cost of coffee as prices rise

Lee Howard and his wife run the Forty Six Coffee Shop in Neath

A painter and decorator turned cafe owner has said it is still a big challenge to keep prices affordable for customers.

Lee Howard has run Forty Six Coffee Shop in Neath for about 10 years with his wife Guiliana, but a combination of rising prices and an increase in the minimum wage has seen their cost pressures rise.

Although the rate of price rises has slowed a lot from the 40-year high in October 2022, prices are still increasing above the Bank of England’s target of 2%.

On Thursday, the Bank of England announced that interest rates would remain at 5.25%, the highest level for 16 years.

Oliver Altissimo has benefited from an increase in the national living wage

"We had to give our staff [an extra] 10% in April this year," said Mr Howard.

“That, on top of everything else, has been the most difficult thing to incorporate really.”

The impact of last month's increase in the National Living Wage from £10.42 to £11.44 an hour is one of the things rate setters at the Bank of England will consider before making their announcement.

Interest rates affect the cost of borrowing money and have a big impact on mortgages.

They are currently at a 16-year high of 5.25%, pushing up costs for anyone who wants to get a mortgage or re-mortgage an existing deal.

The bank raised interest rates to slow down inflation, which measures the rate at which prices rise, but increases in wages can lead to higher prices if employers pass on the additional costs to customers.

While it may be hard on small businesses like his, Mr Howard acknowledges the wage increase does help his staff, most of whom are renting, which is "extremely expensive", or living with family.

One of those is Oliver Altissimo, who is working at the coffee shop while studying computer game design at university.

The 23-year-old is keeping his costs down by living with his grandfather but the cost of living still affects him.

“I did notice a lot of stuff increasing in prices and it gets harder and harder,” he said.

Adriana lost her teaching job during the pandemic

That is a sentiment echoed by many customers.

Adriana lost her job as a language teacher when her department was closed down during the pandemic, though she said she feels “blessed” that her husband is still in work.

Her friend Anne, a retired teacher, said she was “a lucky person” to have her pension but she has noticed things are “going up all the time”.

“They don’t just go up by a penny or two pennies, they go up 10p or 20p or 50p,” she said.

“It maybe slowing down a bit, but I don’t think it’s noticeable really.”

Despite the financial pressures on customers, Mr Howard said his diverse clientele remained loyal, though some treat their coffee as "more of a luxury" than a daily staple.

"The retirees, they're OK," he said.

"But the youngsters who are struggling to get a mortgage or just trying to get on the ladder, you might see them now once a fortnight rather than week-to-week."