Melbourne’s famous coffee is cheaper than a cup in Perth and Hobart, researchers have said, contradicting the Treasury boss’s assertion that the Victorian capital’s cafes charge the world’s highest prices.

Treasury secretary John Fraser was asked on Wednesday whether he agreed with KPMG partner Bernard Salt’s comments that “millennials” should bypass $22 smashed avocado at cafes and save the money for a house deposit.

Mr Fraser said he would rather talk about the “exorbitant” cost of coffee in Melbourne.

“It’s got to be the highest in the world,” he told the the Senate Economics Legislation Committee.

According to the Coffee Economist’s Cappuccino Price Index, a 235-millilitre takeaway coffee costs $3.63 in Melbourne — compared with $3.86 in Perth and $3.73 in Hobart.

“What we found in our research was that Perth had the highest coffee prices in Australia,” Mr Fowler said.

“People earn more money in Perth so everything costs more. It costs more to run cafe there, so coffee is more expensive.”

While the Coffee Economist’s research only covers Australia, Mr Fowler said the most expensive coffee he had bought was while overseas.

“I’ve paid more than $10 for a cup of coffee in Switzerland, which was on the top of a beautiful snow-covered mountain with a fantastic view,” he said.

Besides, said Mr Fowler, coffee was good for the economy — much better, in fact, than a $22 plate of smashed avocado.

“Having smashed avocado may not help the economy whereas sitting down, having a good coffee, relaxing and feeling good about your job is a good thing for the economy,” he said.

The coffee price index

Mr Fowler said coffee drinkers are often paying more for the “experience” than the beans themselves, which he says work out to about $0.55 per cup.

“Location is another big factor. Also all the add-ons like Wi-Fi, nice decor, hipster barista — all those sort of things add to the price.”
Wayne Fowler, Coffee Economist

Interestingly, coffee is cheap in Sydney, the city with some of Australia’s most expensive real estate.

“In inner-city Sydney, we find that coffee prices are often lower because of volume and density,” Mr Fowler said.