Starbucks said higher spending on labor and other inflationary pressures weighed on income in its most recent quarter but added that U.S. customer demand is strong.

The Seattle-based coffee giant said on Tuesday that increased employee wages, training and costs for ingredients hurt its store-level profit for the period. Higher prices partially offset the growing costs, the company said. Starbucks said prices are around 5% higher compared with a year ago.

This post first appeared on wsj.com

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