Inflation might no longer be making headlines but, according to John Gibbons, the Pet Business Professor and president of A GPS for Pet Businesses, it is still impacting the pet sector. The year-over-year (YOY) increases in the monthly Consumer Price Index (CPI) that were larger than we have seen in decades are definitely slowing. June prices grew 0.3 percent from May and the CPI was still +3.0 percent vs. 2022, but down from +4.0 percent last month. The grocery pricing surge has also slowed. After 12 straight months of double-digit YOY monthly percentage increases, grocery inflation is down to +4.7 percent, with four consecutive months below 10 percent. 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 Petflation was +4.1 percent in December 2021 while the overall CPI was +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 2022 and is now +9.6 percent in June, more than 3 times the national rate of 3.0 percent. We will look deeper into the numbers. This and future reports will include:
- 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:
- CPI change from the previous month.
- Inflation changes for recent years (2021>2022, 2020>2021, 2019>2020, 2018>2019)
- Total Inflation for the current month in 2023 vs. 2019 and now vs. 2021 to see the full inflation surge.
- Average annual Year Over Year inflation rate from 2019 to 2023
- Year-to-date (YTD) comparisons
- YTD numbers for the monthly comparisons No. 2>No. 4 above
In our first graph we will track the monthly change in prices for the 24 months from June 2021 to June 2023. Gibbons is using December 2019 as a base number to track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give a visual image of the flow of pricing, including the similarities and differences in patterns between segments and to help compare them to the overall U.S. CPI. The current numbers plus yearend and those from 12 and 24 months earlier are included. In June, Pet Products prices are down from May, but they increased in both Service segments.
(click to enlarge)
In June 2021, the national CPI was +5.7 percent and pet prices were +2.1 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. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In January>June, prices grew every month except for two dips by Supplies, one dip for the other segments and a June dip by Total Pet. Cumulative Petflation from December 2019 has been above the U.S. CPI since November 2022.
- 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 Jan>Jun but 36 percent of the overall 18.7 percent increase in the 42 months since December 2019 happened in the six months from January>June 2022 – 14 percent of the time.
- Pet Food – Prices stayed generally below Dec 2019 levels from April 2020 > September 2021, when they turned up. There was a sharp lift in December 2021, and it continued until the dip in June. 93 percent of the 23.1 percent increase has occurred since 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 setting a new record. Prices stabilized in Nov>Dec but turned up in Jan>Feb, another new record. They fell in March, set a record in May, then fell in June.
- 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>June. It turned up again July>March but the increase slowed to +0.1 percent in April. Prices fell -0.3 percent in May, then they turned up slightly in June, +0.04 percent.
- 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 causing 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. In 2023, prices grew except for a dip in May.
- 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>November. It slowed in December, turned up January>May, then fell in June. Except for five individual monthly dips, including two in June, prices in all segments have increased monthly in 2023. It has been ahead of the cumulative U.S. CPI since November 2022.
Next, Gibbons turns his attention to the Year over Year inflation rate change for June and compare it to last month, last year and to previous years. We will also show total inflation from 2021>2023 and 2019>2023. Petflation dropped below double digits to 9.6 percent in June but is now over 3 times the National rate. The chart will allow you to compare the inflation rates of 2022>2023 to 2021>2022 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. Again, Gibbons has included some human categories to put the pet numbers into perspective.
(click to enlarge)
- U.S. CPI– Prices are +0.3 percent from May. The YOY increase is down to +3.0 percent. It peaked at +9.1 percent back in June 2022. The targeted inflation rate is <2 percent so we are still 50 percent higher than the target. However, a 12th 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 still 12.3 percent, 64 percent of total inflation since 2019. How many households “broke even” by increasing their income by 12 percent in two years?
- Pet Food– Prices are -0.2 percent vs. May and +12.1 percent vs. June 2022. They are also 2.5 times the Food at Home inflation rate, which Gibbons says is not good news. The YOY increase of 12.1 percent is being measured against a time when prices were 9.8 percent above the 2019 level, but that increase is still an incredible 4.3 times the pre-pandemic 2.8 percent increase from 2018 to 2019. The 2021>2023 inflation surge generated 99 percent of the total 23.9 percent inflation since 2019.
- Food at Home – Prices are down -0.1 percent from May. The monthly YOY increase is 4.7 percent, down from 5.8 percent in May and considerably lower than July>September 2022, when it exceeded 13 percent. The 25.2 percent inflation for this category since 2019 is 32 percent more than the national CPI and remains second to Veterinary, with 69 percent of the inflation since 2019 occurred from 2021>2023. The pattern mirrors the national CPI, but we should note that 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 that started early and foreshadowed problems in other categories and the overall CPI surge.
- Pets & Supplies– Prices fell -0.5 percent from May, and they still have the lowest increase since 2019. They also fell again 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. Three straight months of increases pushed them to a new record high in February. Prices fell in March, bounced back in April>May to a new record high then fell in June.
- Veterinary Services – Prices are up 0.6 percent from They are +11.4 percent from 2022 and remain in second place behind Food in the Pet Industry. However, they are still the leader in the increase since 2019 with 30.2 percent compared to Food at home at 25.2 percent. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 64 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 May, prices fell -0.04 percent from May and are -0.8 percent vs. 2022, the only 2022>2023 deflation in any category. Medical Services are not a big part of the current surge as only 35 percent of the 2019>2023 increase happened from 2021>2023.
- Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. June 23 prices were up +0.04 percent from May and +6.3 percent vs. 2022, which is up from 5.6 percent last month but much lower than 8.0 percent in March. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 61 percent of the total since 2019 occurred from 2021>2023.
- Haircuts/Other Personal Services – Prices are +0.4 percent from May and +5.0 percent from 2022, the second highest rate since 2019. However, inflation has been rather consistent so just 54 percent of the inflation from 2019>2023 happened from 2021>2023.
- Total Pet– Petflation is only 9 percent higher than the 2021>2022 rate, but three times the national CPI and +9.6 percent is the highest June rate in history. Compared to May, Product prices fell while Services increased so Total Pet fell -0.2 percent. Gibbons notes that a May>June decrease has happened in 13 of the last 26 years, so it is not that unusual. Food and Veterinary are still the Petflation leaders, and they have the biggest increases over the 2021>2022 rate. Pet Food has generally been immune to inflation as pet parents are used to paying a lot. However, inflation can cause reduced purchase frequency in the other segments.
Now, Gibbons takes a look at the YTD numbers.
(click to enlarge)
The increase from 2022 to 2023 is the biggest for four of nine categories, which all related to pet. The 2022>2023 rate for Haircuts is slightly below 2021>2022. However, the Total CPI, Pet Supplies, Medical Services and Food at Home are significantly down from 2021>2022. The average annual increase since 2019 is 4.4 percent or more for all but Medical Services (3.0 percent) and Pet Supplies (2.7 percent).
- U.S. CPI – The current increase is down 41 percent from 2021>2022, but it is still 11 percent more than the average increase from 2019>2023, and 2.3 times the average annual increase from 2018>2021, with 72 percent of the 18.9 percent inflation since 2019 occurring from 2021>23. Inflation is a big problem that started recently.
- Pet Food – Strong inflation continues with the highest 2022>2023 and 2021>2023 rates on the chart. Deflation in the first half of 2021 kept YTD prices low then prices surged in 2022, with 94.3 percent of the inflation since 2019 occurring from 2021>2023.
- Food at Home – The 2023 YTD inflation rate has slowed slightly but still beat the U.S. CPI by 61 percent. You can see the impact of supply chain issues on the Grocery category as 76 percent of the inflation since 2019 occurred from 2021>2023.
- Pets & Pet Supplies – The inflation rate is down slightly at 5.2 percent as prices fell in June. Prices deflated significantly in 2021 which helped to create a very unique situation. Prices are up 11.3 percent from 2019 but 115 percent of this increase happened from 2021>2023. Prices are up 13.0 percent from their 2021 bottom.
- Veterinary Services – They held onto the top spot in inflation since 2019 but they have only the fourth highest rate since 2021. At +6.4 percent, they have the highest average annual inflation rate since 2019 but Veterinary is unique. They are the only category in which the inflation rate grew steadily every year from 2019>2023. Throughout the pandemic and recovery, no matter what, just charge more.
- Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2023 prices have been deflating and are now at a rate actually 64 percent below the pre-pandemic 2018>2019 rate.
- Pet Services – May 2022 set a record for the biggest year over year monthly increase in history. Prices fell in June but began to grow again in July, reaching record highs in September>April. The January 2023 increase of 8.4 percent was the largest in history. YTD June again slipped a little to 7.0 percent. Growing demand with decreased availability is a formula for inflation.
- Haircuts & Personal Services – The services segments, essential & non-essential were hit hardest by the pandemic. After a small decrease in March 2022, prices turned up again. The YTD rate is 6 percent below the peaks in 2021 and 2022 but is 82 percent more than 2018>2019. Consumers are paying 21 percent more than in 2019. According to Gibbons, this usually reduces the purchase frequency.
- Total Pet – We have seen two different inflation patterns. After 2019, prices in the Services segments continued to increase, and the rate grew as we moved into 2021. The product segments of Food and Supplies were on a different path. They deflated in 2020 and didn’t return to 2019 levels until mid-year 2021. Food prices began a slow increase, but Supplies remained stable until near yearend. In 2022, Food and Supplies prices turned sharply up. Food prices continued to climb until June. Supplies prices stabilized April>May, then they grew June>October but fell in November, rose in December>February, fell in March, rose in April>May then fell again in June. The Services segments have also had their ups and downs, but they are generally inflating. The net is a YTD Petflation rate vs. 2022 of 10.2 percent, which is double the national rate. In May 2022, it was 5.8 percent below the CPI.
Petflation is still strong, according to the data that Gibbons has provided. He put the numbers into perspective. Petflation slowed from 10.3 percent in May to 9.6 percent in June. This is below the record 12.0 percent set in November, but it is a record for the month. More bad news, Gibbons finds, is that nine of the last 11 months have been over 10 percent and the current rate is still six times more than the 1.6 percent average rate from 2010>2021. It’s also more than triple the national rate.
There is no doubt that the current pricing surge is a significant event in the history of the pet industry, but will it affect pet parent spending? In the demographic analysis of the annual Consumer Expenditure Survey, which is conducted by the U.S. BLS with help from the Census Bureau, Gibbons notes that pet spending continues to move to higher income groups. However, the impact of inflation varies by segment. Supplies is the most affected, as since 2009 many categories have become commoditized, which makes them more price sensitive. Super premium food, Gibbons adds, 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 decrease in visit frequency. Spending in the Services segment is the most driven by higher incomes, so inflation is less impactful.
Inflation is not just a singular event, Gibbons notes. Instead, inflation is cumulative. Total Pet Prices are up 9.6 percent from 2022, but they are up 19.2 percent from 2021 and 23.3 percent from 2019. That is a huge increase in a very short period. It puts tremendous monetary pressure on pet parents to prioritize their expenditures. According to Gibbons, the needs of pets are always a high priority, but he is hoping for relief in the form of stabilized prices and even deflation. This is not likely in the Service segments, he concludes, but it is definitely possible in products. It’s happened before, and Gibbons admits that pet parents need it again.