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Petflation Report: Has January 2023 Price Increase Slowed vs 2022?

Glenn Polyn//February 20, 2023//

Petflation Report: Has January 2023 Price Increase Slowed vs 2022?

Glenn Polyn //February 20, 2023//

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John Gibbons, the Pet Business Professor and president of A GPS for Pet Businesses, has been reporting on inflation and its impact on the pet industry. The year-over-year (YOY) increases in the monthly Consumer Price Index (CPI) are larger than have been seen in decades. January prices grew 0.8 percent from December and the CPI was still up +6.4 percent vs. 2022, but down from +6.5 percent last month. The grocery price surge also slowed but they’re still up 11.3 percent over 2022. That’s 11 straight months of double-digit YOY monthly percentage increases. These are the first 10+ percent increases since 1981. As we have seen in recent years, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Total Pet prices were 4.1 percent higher in December 2021 than in December 2020, while the overall CPI was up 7.0 percent. The gap narrowed as Petflation accelerated and reached 96.7 percent of the national rate in June 2022. National inflation has slowed since July, but Petflation has generally increased. It passed the National CPI in July and is +10.6 percent in January, 65.6 percent higher than the national rate of 6.4 percent. Gibbons has looked deeper into the numbers, and this future report includes:

  • A rolling 24-month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
  • Monthly comparisons of 2023 vs. 2022, which will include pet segments and relevant human spending categories, plus:
    1. CPI change from the previous month
    2. Inflation changes for recent years (2022>2021, 2020>2021, 2019>2020, 2018>2019)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge
    4. Average annual YOY inflation rate from 2019 to 2023
  • Since January data is year to date (YTD), we won’t have separate YTD data until next month. It will include:
    1. YTD numbers for the monthly comparisons No. 2>No. 4 above

Gibbons uses the first graph to track the monthly change in prices for the 24 months from January 2021 to January 2023. He uses December 2019 as a base number in order to track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. The graph shows the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus yearend and those from 12 and 24 months earlier are included. For all but Supplies, cumulative inflation peaked in January. Gibbons has added and highlighted the month that Supplies peaked, which will reveal some key waypoints.

(click to enlarge)

The pandemic hit home in 2020. In January 21, the national CPI was only +1.8 percent and Pet prices were +1.2 percent. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI while Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July 2022, when all increased. In August>October Petflation accelerated, except for a small October dip in Veterinary. In November>December, Services and Food prices continued to grow while Veterinary and Supplies prices stabilized. In January, all inflated and Total Petflation since December 2019 has been above the U.S. CPI since November.

  • U.S. CPI – The inflation rate was below 2 percent through 2020. It turned up in January 2021 and continued to grow until flattening out in July>December 2022. Prices turned up again in January but 41 percent of the overall 16.4 percent increase since 2019 happened from January>June 2022.
  • Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December 2021 but 89 percent of the 17.3 percent increase occurred in 2022.
  • Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021, when they returned to December 2019 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued from February> May, turned up in June, flattened in July, then turned up in August>October to a new record high. Prices stabilized in November>December but turned up again in January.
  • Pet Services – Normally inflation is 2+ percent. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021, consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in January>April. Inflation was stronger in 2022 but it got on a rollercoaster in March to June. It has turned up again July to January and passed Food for second place among pet industry segments.
  • Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December 2021, which put them above the overall CPI. In May 2022, prices fell and stabilized in June, which caused them to briefly fall below the National CPI. However, prices turned up again and, despite October and December dips, they have stayed above the National CPI since July and hit a new record in January.
  • Total Pet – The blending of patterns made Total Pet appear calm. In December 2021, the pricing surge began. In March>June 2022, the segments had ups and downs but Petflation grew again from July to November. It slowed in December then turned up again in January as all segments increased prices. It has been ahead of the cumulative U.S. CPI on the 2019>2023 chart since November.

Next, Gibbons turns his attention to the YOY inflation rate change for January and compare it to last month, last year and to previous years. He also has added a new measurement that shows the total inflation from 2021 to 2023. Although inflation is slowing, Gibbons does not believe that it’s over. This measurement shows the cumulative amount of the current pricing surge. Comparing the annual inflation rates of 2022>2023 to 2021>2022 but also showing how much of the total inflation since 2019 came from the ongoing trauma. Again, Gibbons has included some human categories to put the pet numbers into perspective.

(click to enlarge)

Overall, Prices were +0.8 percent vs. December and were up 6.4 percent vs. January 2022. The Grocery increase is down to 11.3 percent but is still a big negative. January prices generally rise from December so it’s not surprising that eight of nine categories had increased prices from last month. Five of the increases were over 0.5 percent. Last month there was only one. Meanwhile, two of the increases were over 1.0 percent and the Pet Industry again led the way – Pet Services +1.5 percent and Veterinary Services +1.0 percent. The overall national YOY monthly inflation rate is slightly down from December, but it is significantly down vs. the 2021>2022 rate. No other category has that pattern. The 2022>2023 inflation rate is higher than the 2021>2022 rate in all other categories. In all but two – Medical Services and Haircuts/Personal Services, it is the highest rate in any year since 2019.

The new 2021>2023 measurement reveals that over 75 percent of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary, Medical Services and Haircuts & Personal Services. The pet supplies segment has a very interesting situation. The 2021>2023 inflation surge provided 113 percent of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 2020>2021.

Specific Observations

  • U.S. CPI– Prices are +0.8 percent from December. The YOY increase is down to +6.4 percent. It peaked at +9.1 percent back in June. The targeted inflation rate is <2 percent so we are still more than three times higher than the target. However, a seventh straight slight decline is good news. It is also good that the current inflation rate is below 2021>2022 but the 2021>2023 rate is 14.4 percent, which is 76 percent of total inflation since 2019. How many households “broke even” by increasing their income by over 14 percent in two years?
  • Pet Food– Prices are +0.2 percent vs. December and 15.1 percent vs. January 2022. They are also 34 percent higher than the Food at Home inflation rate – which Gibbons states is not good news. The YOY increase is being measured against a time when prices were only 1.9 percent above the 2019 level, but that increase is still an incredible 12.5 times the pre-pandemic 1.2 percent increase from 2018 to 2019. The 2021>2023 inflation surge generated 88 percent of the total 20.7 percent inflation since 2019.
  • Food at Home – Prices are up 8 percent from December. The monthly YOY increase is 11.3 percent, down slightly from 11.8 percent in December but considerably lower than July>September 2022 when it exceeded 13 percent. The 24.9 percent Inflation for this category since 2019 is the highest on the chart and is 32 percent more than the national CPI. Gibbons notes that 79 percent of their inflation since 2019 occurred from 2021>2023, but their pattern is different from the national CPI. Grocery prices began inflating in 2020>2021 then the rate accelerated. It appears that the pandemic supply chain issues in Food which contributed to higher prices started early and foreshadowed problems in other categories and the overall CPI surge.
  • Pets & Supplies – Prices are up +0.4 percent from December. That’s two straight monthly increases after a dip in November. They still have the lowest increase since 2019 and now have fallen to last place in terms of the monthly increase vs. last year for Pet Segments. As we noted earlier, prices deflated in 2020>2021 so the 2021>2023 inflation surge accounted for 100+ percent of the total price increase since 2019. They reached an all-time high in October then prices deflated. However, 2 straight months of increases has put them within 0.4 percent of the record high.
  • Veterinary Services – January prices are +1.0 percent from They are +8.4 percent from 2022 and are tied with Services for 2nd place behind Food in the Pet Industry. They also remain second in the increase since 2019 with 24.5 percent compared to Food at home at 24.9 percent. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge but only 57 percent of the four years’ worth of inflation occurred in the two years from 2021>2023.
  • Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 2020>2021. In January prices fell -0.1% from December but were +3.0 percent vs. 2022, the second highest rate since 2019. Medical Prices are not a big part of the current surge as only 40 percent of the 2019>2023 increase happened from 2021>2023.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. January prices were up +1.5 percent from December, the biggest increase on the chart, and +8.4 percent vs. 2021, a new rate record and an all-time pricing high. Their inflation is tied to the current surge as 72 percent of total since 2019 occurred from 2021>2023.
  • Haircuts & Other Personal Services – Prices are +0.2 percent from December and +5.2 percent from 2022, but this is only second to +5.7 percent in 2020>2021. Inflation began to grow in 2020>2021 and 50 percent of the inflation from 2019>2023 happened from 2021>2023.
  • Total Pet– Petflation is strong, 2.4 times the rate of last year, 65.6 percent ahead of the National CPI and the +10.6 percent is also the highest January rate in history. Prices increased in all segments vs. December so Total Pet was up 0.8 percent, which is actually the norm. A Dececember>January increase in Petflation has happened in 25 of the last 26 years. Food is the runaway leader, but inflation is becoming more balanced as all other segments have aa YOY rate of 7.2>8.4 percent. Inflation can cause reduced purchase frequency in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying a lot and it is needed every day.

YOY Petflation slowed slightly in January from December but still set a new record for the month. Will it impact spending? Gibbons puts it into the following perspective. The 10.6 percent January 2023 increase in Total Pet beat the 10.3 percent record set in 2009 and is more than six times more than the 1.5 percent average rate from 2010>2021. Pet spending continues to move to higher income groups, but the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. The Services segment is the most driven by higher incomes, so inflation is less impactful. The U.S. Bureau of Labor Statistics recently decided to update the CPI annually rather than every two years based upon each expenditure’s share of total expenditures. Gibbons worked with their representatives to update the CPI of his specially created aggregates. During his conversations with them, they noted that pet expenditures had one of the biggest share gains of any group. Apparently, pet parents are just reallocating their spending to prioritize their fur babies’ needs. This is not unexpected. Gibbons will report in the future to reveal if it is impacted by continued high inflation.

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