Tracking Pet Food Pricing – The PPI (Mfg) vs CPI (Retail)

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Changes in the price manufacturers charge for a product obviously impact the retail price for consumers. However, it is not always a direct correlation and often there is a significant delay in the response. The retailers who sell high demand products like Pet Food are under intense competitive pressure.

In this brief report we will look at how changes in the Producer Price Index (PPI) for Pet Food match up to the changes in the retail CPI from December 2019 to 2022. Pre-pandemic December 2019 is used as the base number in all graphs to facilitate comparisons.

The first graph plots the PPI pricing path of Dog & Cat Food and Other Pet Food vs the Pet Food Retail CPI.

  • Pricing remained essentially stable for all groups through most of 2020. The first change was that the PPI for Non-Dog/Cat Pet Food began moving up in November. This lift has continued but this small category has little impact on overall Pet Food Retail Prices.
  • The Dog & Cat Food PPI moved up sharply in July 2021 then essentially stabilized until the end of the year. This turned Retail Prices up slightly, only +1.6% vs 2019 by December 2021.
  • In 2022, the Dog & Cat PPI turned up in Jan/Feb, stabilized in Mar/Apr, then rose sharply in May. Pet Food Retail prices began growing in February. This increase accelerated in March and continues through May. The Retail inflation rate for Pet Food is now 66% of the PPI increase for Dog & Cat Food. In February it was 31.6% and only 25.4% back in December 2021. This gap is definitely narrowing as the Retail price increases are more closely matching the increase in manufacturing costs. By the way, the increase for Other Pet Foods is a meteoric +31.6% vs 2019. This is huge and by far the biggest increase in any Pet Food category, but it is only 29% of the 109% increase in the Gasoline PPI over the same period.

Obviously, it takes a while for a rise in the PPI to impact retail prices. Also, as we saw in most of 2020 and in the 2nd half of 2021, stability in the PPI usually generates stability in Retail prices.

Dogs & Cats “rule” the pet food segment just like they “rule” the overall Pet Industry. However, the lift in prices for manufacturing Food for Other Pets has now gotten so large that it is having an impact in pushing Pet Food Retail Prices up.

We will now drill a little deeper into the “ruling” Dog & Cat Food categories. We will look at the individual PPI history for Dog Food and Cat Food and the 2 largest sub-categories in each – Dry/Semi-moist and Canned. Our chart will track and compare the Pet Food CPI and the PPI history for all groups from December 2019 to March 2022. The detailed data release for these specific groups is 2 months behind the overall PPI release.

  • The PPI for all categories was essentially unchanged from December 2019 until October 2020. At that time manufacturers’ prices in the Canned Dog Food category moved up 1.1%.
  • In October 2020 Pet Food retail reached bottom in their deflationary movement. The price increase in Canned Dog Food slowed overall Pet Food deflation and essentially stabilized prices.
  • Both the individual PPIs and the overall Pet Food CPI plateaued from November 2020 through May 2021.
  • All prices moved up slightly in June 2021 but the PPIs took off in July. The Pet Food CPI also was above December 2019 for the 1st time since February 2020.
  • Canned Dog Food led the skyrocketing PPI prices in July 2021 but all categories had a significant increase. The increase continued in August, but the CPI unexpectedly dipped slightly below December 2019.
  • The PPIs for all groups essentially stabilized from September through December 2021 while the Pet Food CPI began to increase, especially from Nov>Dec.
  • In January 2022, the PPIs for all but Canned Dog Food turned up again. Their increase continued in February, with Canned Cat Food skyrocketing up to +12.7%, almost equal to the overall increase by Canned Dog Food. The Pet Food CPI moved up slightly in January and then inflation took off in February.
  • The PPIs stabilized again in March, but we should note that prices for Canned Dog Food have been stable since August, after the spectacular Jun>August lift. While manufacturing prices have stabilized, inflation in Pet Food Retail is accelerating. From our 1st chart we know that this trend continued through May.
  • Once again, we see that there is obviously a timing delay from the PPI to the CPI. It takes time for the impact to work its way from manufacturer to retailer to consumer.
  • We also see that the Canned Food categories have significantly more pricing volatility than Dry Food for both Dogs and Cats. While Canned Dog Food led the way in the PPI lift and ended up with the biggest increase, +13.3%, Canned Cat Food finished a close second at +12.7%.
  • However, when you look at how these individual PPIs compare to the overall PPI for Dog or Cat, it is readily apparent that Canned Cat Food has a much larger share of total Cat Food than Canned Dog Food has of Total Dog Food.

In terms of what will happen in the future, we turn again to our first chart. The PPI for Dog/Cat Food was stable through April but turned sharply up again in May. When Mfg prices go up, Distributors & Retailers must take a closer look at their product mix. For those items with increasing prices, they can raise their prices, accept lower margins or some combination of both. The Retail CPI is spiking. It’s likely that rising manufacturing prices will cause Retail Pet Food inflation to continue to grow. We need the PPIs to flatten for the CPI to stop increasing. Ultimately, we hope that any supply chain issues will be fixed, returning Pet Food Retail and Manufacturing to a more price competitive market.

Retail Channel Monthly $ Update – April Final & May Advance

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By 2021, the market had generally recovered from the impact of the pandemic. Now we are being hit by extreme inflation, with rates higher than we have seen in 40 years. Obviously, this can affect retail sales, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

The Census Bureau Reports are the Monthly and the Advance Retail Sales Reports. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We begin with the Final Report for April and then move to the Advance Report for May. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports, and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2021
    • Current Month Real change – % vs same month in 2021 factoring in inflation
  • Current YTD change – % & $ vs 2021
    • Current YTD Real change – % vs 2021 factoring in inflation
  • Current YTD change vs 2019 – % & $
    • Current Real change YTD vs 2019 – % factoring in inflation
  • Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the April Final. After an uptick in March, sales generally turned down slightly in April. The $ were up for April and YTD vs 2021 for all groups but Auto. However, when you factor in inflation, only Restaurants had increases in these measurements. Here is the April data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The April Final is $2.6B less than the Advance Report. The drop was driven by Relevant Retail: -3.6B; Auto: -$0.1B; Restaurants: +$0.7B; Gas Stations: +$0.4B. Total Sales are down slightly from March, but consumers continue to spend more vs 2021 in all but Auto. However, the “real” numbers give you a different view. All but Restaurants are really down in all measurements. Restaurants are strong due to a late recovery but also note that half of the inflation in this group came before 2022. The inflation impact on Relevant Retail is especially significant as their Real YTD sales vs 2021 are now negative. Relevant Retail does have the best performance since 2019 as 67.9% of their 31.8% growth is “Real”.

Now, let’s see how some Key Pet Relevant channels did in April.

Overall – Only 6 of 11 were up vs March. Vs April 2021, 9 reported more $ but only 2 were really up. In YTD vs 2021, 9 reported increases but only 4 were real. Vs 2019, only the Office/Gift/Souvenir channel was “really” down.

  • Building Material Stores – Their Spring lift has started but it is not as strong as last year. Home Ctr/Hdwe is up vs 21 but Farm stores are down for the month & YTD. The Bldg/Matl group has an inflation rate over 11% which produced all negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 30% since 2019 in both channels. Importantly, 67.9% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.3%, Real: 7.5%; Farm: 10.5, Real: 6.6%
  • Food & Drug – Both channels are truly essential. Except for the food binge buying in the pandemic, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The rate for Grocery products is 5 times higher than for Drugs/Med products. Sales for Drug Stores are flat vs March 2021 but 90% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 28.5% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.3%, Real: +1.9%; Drug Stores: +4.1%, Real: +3.7%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their normal Spring lift started in March then stabilized in April at a level considerably below 2021. Their current inflation rate is 7.5% but it was also high in 20>21, +4.8%. However, 73% of their 48.8% lift since 2019 is real. Their Avg Growth Rate was: +14.2%; Real: +10.7%.
  • Gen Mdse Stores – Sales in SupCtr/Clubs fell vs March and all channels are up only slightly for the month and YTD vs 2021. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were struggling before COVID and only 17% of their 8% growth since 2019 is real. For the other channels, it averages 45%. Avg Growth Rate: SupCtr/Club: 5.6%, Real: 2.5%; $/Value Strs: +6.6%, Real: +3.5%; Disc. Dept.: +2.9%, Real: +0.5%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down vs March but up vs 2021. The growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021. However, their real sales vs 2019 are still down -4.3%. Their true recovery is still a long way off. Avg Growth Rate: +1.0%, Real: -1.5%
  • Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. April sales are up in all measurements, but the YTD growth rate is less than half of the average since 2019. However, 91% of their 81.8% growth since 2019 is real. Their Avg Growth Rates is: +22.1%, Real: +20.4%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. In 2022, they are the Sales increase leaders over 2021. As expected, their sales dipped in January from December but all measurements have been positive every month since then. Plus, 88% of their 62.9% growth since 2019 is real. Their Avg Growth Rate is: +17.7%, Real: +15.8%. They are 2nd in growth since 2019 to the internet, which is somewhat surprising.

There is no doubt that high inflation is an important factor in Retail. In actual $, 9 channels reported increases in YTD sales over 2021 and 9 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 YTD & 2 monthly. This is a very clear indication of the growing impact of inflation at the retail channel level. Recent data showed that Inflation continues to grow. Let’s look at the impact on the Advance Retail Sales numbers for May.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now radical inflation has entered the game with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. In May there was a  small overall increase from April, but the amount sold again fell in all but Restaurants. If it continues, it can reduce consumer spending. This has happened in Auto in April & May.

Overall – Inflation Reality is setting in. The monthly increase vs the previous year continues to be smaller than it has been. The still recovering Restaurants and Gas Stations are up double digits vs 2021 but Auto $ are down again. May set a new $ record for the month, but the real monthly and YTD sales vs 2021 for all but restaurants are down.

Total Retail – Every month in 2022 has set a monthly sales record. May $ are $698B, second only in $ to December 2021. In a normal year, sales should stay at or near this level until dipping slightly in September. However, 2022 is not normal. Sales are +2.4% vs April but are still up 8.2% vs May 2021 and 10.6% vs YTD 2021. However, when you factor in 13+% inflation, both measurements are down for the 3rd consecutive month and only 43.6% of the 31.2% growth since 2019 is real. The Avg Growth Rate is: +9.5%, Real: +4.3%. The impact of Inflation is growing.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but have turned up since then setting new all-time monthly records in March, April and now May ($90.2B). They are the only big group that is positive in all measurements. Their inflation is high at 7.3% for May and 6.8% YTD but it is the lowest of any big group. 61.6% of their 30.2% growth since 2019 is real. This is up from 51% in April which shows the appeal of “eating out” after months of cooking at home. Their Avg Growth Rate: +9.2%, Real: +5.8%. Although they only account for 12.9% of Total Retail sales, their positive performance significantly helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales fell in January, turned up in Feb/Mar then fell again in April/May. They are unique in that their March, April and May sales are below 2021. These are the only reported sales negatives by any group vs 2021. This is bad but their real sales numbers are much worse. Extraordinarily high inflation has pushed their real sales down -16+% in all measurements vs 2021, the worst performance of any group. Plus, their 26.7% growth since 2019 is really down -1.4%. Their Avg Growth Rate: +8.2%, Real: -0.5%. It is very likely that the drops in the reported $ales in March>May are tied to extreme inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell in January and February then turned up in March>May. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation is in all of the headlines and is by far the highest of any expenditure category. It is over 44% for 2022 vs 2021 and has even caused consumers to buy 6% less than they did in 2019. Avg Growth Rate: +13.2%, Real: -2.0%. It’s a textbook example of the initial impact of inflation. Consumers are spending more but buying less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in January and February, turned up in March, flattened in April, then grew in May. All months in 2022 set new records but their YTD increase is now 23.4% below their 9.4% avg growth since 2019. Now, we’ll look at the impact of inflation. 65.8% of their 31% growth since 2019 is real. However real sales vs 2021 are down -1.8% for the month and -0.4% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.4%, Real: +6.4%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down 0.4% so the amount of products that consumers bought in 2022 is actually less than in 2021. They just paid more. That’s not good.

The impact of inflation is truly beginning to Hit home. All groups but Restaurants now have no monthly or YTD real growth vs 2021. Both Auto & Gas Stations are even “really down” vs YTD 2019. Added together, this has produced 3 straight months of real monthly and YTD drops for Total Retail. We are now in Phase II of inflation. Consumer spending increases but the amount bought declines. With 3 straight down months, the Auto Group is likely in Phase III, when consumers actually cut back on spending. If inflation continues, this worsening situation will become more widespread.

Here’s a more detailed look at May by Key Channels

  • Relevant Retail: Avg Growth Rate: +9.4%, Real: +6.4%. 9 channels were up vs April and vs May 2021. This was enough to set a May $ales record. 10 were up YTD vs 2021 but you will see the negative impact of inflation in the real numbers.
  • All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers turned positive vs 2019 in April but in May they are still down in real terms in all measurements vs both 2019 & 2021. Avg Growth: +0.04%, Real: -2.6%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. While May sales are up from April and vs May 2021 and YTD, their real numbers are down and only 41.2% of their 17.7% lift from 2019 is real. Avg Growth: +5.6%, Real: +2.4%.
  • Grocery – These essential stores depend on frequent purchases, so except for the binge buying in 2020, their changes are generally less radical. Inflation has hit Groceries hard. Monthly and YTD increases vs 2021 are strong but inflation is stronger. Real sales are down and only 24.5% of the growth since 2019 is real. Avg Growth: +6.3%, Real: +1.6%.
  • Health/Drug Stores – At least the drug stores in this group are essential, but consumers visit far less frequently than Grocery stores. Most of their COVID ride has been rather calm. Their inflation rate is low and sales are positive in all measurements. Plus, 90% of their 13.3% growth from 2019 is real. Their Avg Growth is: +4.2%, Real: +3.8%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth which has continued through 2022. $ are up 5.9% from April and they’re positive in all measurements. Also, 89% of their growth from 2019 is real. Avg Growth: 5.1%, Real: 4.6%.
  • Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation on Furniture is very high, so growth is slowing and their real numbers vs 2021 are negative. Only 32.4% of their growth since 2019 is real. Avg Growth: +6.9%, Real: +2.4%.
  • Electronic & Appliances – Look at the graph. This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from April but are down across the board vs 2021. The increase from April and deflation has turned sales positive vs 2019 but only +0.9%. Avg Growth: +0.30%, Real: +0.26%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. After slowing in April, this year’s spring lift is restarting but at a lower level than 2021. When you factor in strong, double-digit inflation, the amount sold vs 2021 is significantly lower for both May and YTD. 61.5% of their strong 36.6% sales growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +7.0%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. Sales were up in May which made the month and YTD $ up vs 2021. However, all “real” measurements are down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 79% of their 36.8% growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +8.8%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. In April & now May, they moved to the top spot in both monthly & YTD lifts vs 2021. Their YTD growth since 2019 is 2nd only to NonStore. Plus, 83% of the 44.8% growth since 2019 is real. Their Avg Growth is: +13.1%, Real: +11.1%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their Growth has slowed significantly in 2022 but all measurements are positive. 89% of their 71.6% increase since 2019 is real. Their Avg Growth is: +19.7%, Real: +17.8%.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Moreover, each month it is getting worse. On the surface, the impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth has slowed markedly. Overall, the market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph above illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up vs May 2021 and 9 are up YTD. However, when you factor in inflation, only 4 are up for May and 4 for YTD. Inflation is real and there are real and even worse consequences if it continues. To see an example of this, take a look at what is happening in the Auto Group.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

This list raises some questions. Here are some answers to some of the more obvious ones.

  1. Why is the group for Non-store different from the Internet?
    1. Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
  2. Why is there no Food at home included in Non-store or Internet?
    1. Online Grocery purchasing is becoming popular but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
  3. 6 Channels have the same CPI aggregate but represent a variety of business types.
    1. They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
  4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
    1. According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
  5. What about Drug/Health Stores only being tied to Medical Commodities.
    1. An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
  6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
    1. While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the mix of actual products is substantially different.

Petflation 2022 – May Update: Prices stay at +8.1% above 2021

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Inflation continues to make headlines. There have been year over year increases in the monthly Consumer Price Index (CPI) larger than we have seen in decades. In May the CPI was up 8.6% vs 2021, beating the previous high of 8.5% in March. Food at Home (groceries) prices continue to surge, up 11.9% over 2021. That’s 3 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, even minor price fluctuations can affect consumer pet spending, especially in the more discretionary pet segments. With that in mind, we will continue to publish monthly reports to track petflation as it evolves in the marketplace.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed in March & April as Petflation accelerated to 97.6% of the national rate. In May, Inflation in the overall market became stronger. However, thanks to a price drop in Veterinary, Petflation stabilized, and the gap widened – 8.1% for Pet vs 8.6% for the national rate. Let’s look a little deeper. 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 22 vs 21 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month
    2. Inflation changes for recent years (20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2022 vs 2019
    4. Average annual Year Over Year inflation rate from 2019 to 2022
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from May 2020 to May 2022. We will use December 2019 as a base number in this and future reports so we can 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. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus those from 12 and 24 months earlier are included as are the yr-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons. (Note: the April Peak for Veterinary is also highlighted.)

The pandemic really hit home in April/May. Even the national CPI deflated for 2 months, but not the Services segments. There are 2 different patterns between the Services and the Products segments. Veterinary and Services prices generally inflated after mid-2020, a pattern similar to the overall CPI. Food and Supplies prices generally deflated until late 2021. After that time, inflation took off, but the patterns became mixed. Services paused in March and Veterinary dropped in May. Supplies prices have essentially plateaued while inflation in Food is accelerating. Here are some things to note:

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow through May 2022. 65% of the overall 13.7% increase since 2019 occurred in the last 12 months.
  • 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. 90% of the 8.4% increase has happened since November.
  • Pet Supplies – Remember that Supplies prices were high in December 2019 due to the added tariffs. They had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022 when they turned sharply up reaching a new all-time pricing high in January, beating the 2009 record. Prices have essentially plateaued at this new, higher level since February.
  • Pet Services – Normally inflation is 2+%. 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 Jan>Apr. Inflation got stronger in 2022, slowed a little in March, turned up in April and then slowed a bit in May – basically an every other month pattern
  • Veterinary – Inflation has been generally consistent in Veterinary. Prices began rising in March 2020 and increased through 2021. Then a pricing surge began in December which pushed them past the overall CPI with total inflation since 2019 reaching +15.5% in April. In May prices fell but they are still ahead of the National CPI.
  • Total Pet – The blending of the segment patterns made the Pet Industry appear calm compared to the overall market. That ended in December 2021 as prices surged in all segments. In May inflation is slowing in all but Food.

Next, we’ll turn our attention to the Year over Year inflation rate change for the month of May and compare it to last month, last year and to previous years. We’ve added some human categories to put the pet numbers into perspective.

Overall, Prices vs 2021 were up 8.6% vs 2021 with the Grocery increase now hitting 11.9%. There are some small positives. Only 3 of 9 categories had increases over 1% from last month, the same as April but down from 5 in March…. And Veterinary Services prices actually fell 1.0% from April. There is a little hope.

  • U.S. CPI – Prices are up 1.1% from last month. In April the increase was 0.6%. May Inflation was +8.6%. The targeted rate is <2%. We remain 4+ times higher than the “target”. Inflation is getting worse, and it accelerated again in May.
  • Pet Food – Prices are up 1.6% vs April and 9.1% vs May 2021. The YOY increase is being measured against a deflationary year, but that increase is more than triple the pre-pandemic 2.8% increase from 2018 to 2019.
  • Food at Home – Prices are up 1.3% from March. The increase from 2021 is 11.9%, which is the largest increase in any month since 12.3% in April 1979 and the largest May monthly increase since 16.6% in 1974. Inflation for this category since 2019 is the highest of any category on the chart and is 28% more than the national CPI.
  • Pets & Supplies – Prices grew 0.1% from April but they are slightly below March’s record high. They now have the lowest monthly increase over 2021 of any industry segment, and the lowest increase since 2019.
  • Veterinary Services – May prices fell 1.0% from April. They are up 7.4% from 2021 but now trail Pet Food in the Pet Industry. They also lost the lead in the increase since 2019 with 16.9% compared to Food at home at 18.1%.
  • Medical Services – Prices sharply increased at the start of the pandemic in 2020 but then inflation slowed and returned to a more normal rate in 2021. It appears to be turning strongly up again in 2022.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021 & 2022. Prices are up 0.5% from April and 7.4% from May 2021, beating the record 6.5% increase in February and double the rate of 2019 & 2020. However, we should note that a big part of the record May lift was due to a 0.9% drop in prices from April to May 2021.
  • Haircuts & Other Personal Services – Prices are +0.5% from April and 6.2% from 2021. They are +15.6% since 2019.
  • Total Pet – Inflation is strong and is 3+ times the rate of last year. Veterinary prices fell and Supplies prices plateaued which helped keep overall Petflation steady at +8.1%. In the past, inflation has caused a reduction in the frequency of purchase in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying big bucks and it is needed every day. We’ll see if consumers are willing to pay the new high prices for food and buy the more discretionary products/services at the same frequency as they did in the past.

Now here’s a look at Year-to-Date numbers. How does 2022 compare to previous years…so far?

The increase from 2021 to 2022 is the biggest for 7 of 9 categories. The average annual increase since 2019 is over 3% for all but Pet Food & Pet Supplies. This is due to deflation in 2021.

  • U.S. CPI – The current increase is double the average increase from 2019>2022, but over 4 times the average annual increase from 2018>2021. Inflation is a big problem that started recently.
  • Pet Food – Inflation is growing stronger, especially after deflation in 2021.
  • Food at Home – The 2022 YTD inflation beat the U.S. CPI by 19.5%. You can see the impact of supply chain issues.
  • Pets & Pet Supplies – Prices have plateaued at a new record level since February. Although the 2021>22 increase is being measured against a deflationary 2021, it is very significant and 2nd to Veterinary in the Pet Industry segments.
  • Veterinary Services – Has the most inflation since 2019 and is the only segment on the chart with a 3+% inflation rate each year throughout the pandemic and recovery. No matter what, just charge more.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but the rate has slowed since and has now essentially returned to near pre-pandemic levels.
  • Pet Services – February set a record for the biggest year over year monthly increase in history. The rate slowed in March, turned up again in April then set a new record in May. The current YTD increase of 6.1% remains 2nd only to 6.4% in 2009. Demand has grown for Pet Services while the availability has decreased, 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, prices turned up in April/May. The YTD rate is now down slightly from 2020>21 but still 79% more than 2018>19. Consumers are paying 14.9% more than in 2019. This usually reduces the frequency.
  • Total Pet – When we first looked at the pandemic impact on Petflation. We saw basically two different patterns. Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on a different path. They generally 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 we neared yearend. In 2022, everything changed as Food and Supplies prices turned sharply up. Food prices continued to climb as Supplies pricing stabilized and Veterinary prices dropped. The net was a YTD CPI increase vs 2021 for Total Petflation of 6.7%, 82% of the extraordinarily high 8.2% overall rate. It was only 72.5% of the National rate in March.

Inflation is strong in the Pet Market. Will it impact spending? Let’s put it into perspective. The 6.7% YTD increase in Total Pet is far below the 9.6% record set in 2009 but 4 times larger than the 1.5% avg since then. Although pet spending continues to move to higher income groups, 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 just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. Hopefully, Supplies prices will stabilize and begin to deflate. Eliminating the special tariffs implemented in September 2018 would be a big help. However, we’ll just have to wait and see the impact of the continued strong Petflation.

2020 Veterinary Spending was $24.85B – Where did it come from…?

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Now we will turn our attention to the final Industry Segment – Veterinary Services. For years, Veterinary Services prices have had high inflation. This has resulted in CU income becoming the most dominant factor in spending behavior and a reduction in visit frequency. Consumers paid more, just used Veterinary Services less often.

Things changed in 2017 as low inflation spurred a 7.2% increase in visit frequency and a $2.5B increase in spending. In 2018 inflation returned to more normal levels. Consumers spent $0.56B more (+2.7%). However, the inflation rate was 2.6% so virtually all of the lift was from increased prices. In 2019 the situation got worse. Consumers spent $0.58B (+2.7%) more but inflation was 4.14%. This means that there was an actual decrease in the amount of Veterinary Services purchased. In 2020 the pandemic hit and consumers concentrated on needs. For Pet Parents, that meant that they became focused on Pet Food & Veterinary Services. As a result, Veterinary spending grew $3.05B, (+14.0%).

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2020 and the $3.05B increase. The first chart details the biggest pet Veterinary spenders for each of 10 demographic categories. It shows their share of CU’s, share of Veterinary spending and their spending performance (Share of spending/share of CU’s). In terms of performance – 6 of 10 groups perform above 120%, the same as 2018 & 2019. This is more than Supplies & Services with 5 but much less than Food (8). This means that these big spenders are performing well but it also signals that there is still a large disparity between the best and worst performing demographics in the “needed” segments. Income remains the biggest factor in Veterinary Spending, but Education is also important as College Grads is a different group from Total Pet. The categories are in the order that reflects their share of Total Pet $.

  1. Race/Ethnic – White, not Hispanic (87.2%) down from 90.9%. This group accounts for the vast majority of spending in every segment, but they lost significant share in 2020. Their 127.5% performance is also down from 132.6% and they fell from 2nd to 3rd in importance in Veterinary Spending but still reflects the spending disparity. Minorities did narrow the gap in 2020. Hispanics & African Americans spent 50% more while the spending by Asians almost tripled.
  2. Housing – Homeowners (83.1%) down from 83.2% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 126.3% performance rating is down from 130.5%, but they held on to 4th place. The slight decrease in share and performance came from a bigger % increase from Renters as they fell in numbers while homeownership grew. We should note that Homeownership is not as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
  3. # in CU– 2+ people (77.9%) up from 75.0% This group, which is 70% of U.S. CUs, gained share and their performance grew from 107.4% to 111.0%. Their rank in terms of importance in Veterinary Spending moved up from last to 8th. Spending by Singles and 4 person CUs was flat while 2, 3 & 5 person CUs had big gains.
  4. Area – Suburban & Rural (67.1%) down from 68.7% Suburban CU’s are the biggest spenders in every segment. Rural had a great year and was added to hit the 60% goal. Performance still fell to 106.4%, from 107.9%. The decreases in share and performance came because Suburbs 2500> were up only 3.2% while Center City was +19.8%.
  5. # Earners – “Everyone Works” (69.7%) down from 70.4% In this group, all adults in the CU are employed. Their Performance fell from 121.5% to 120.3% and they fell in rank from #5 to #6. Only No Earner, Singles spent less. The small drop in share and performance were due to a huge lift by 2+ People CUs with 1 or no earner.
  6. CU Composition – Married Couples (58.6%) up from 57.0% Their performance also grew to 120.8% from 116.7% and they returned to the 120+% club at #6. Until 2019, Married Couples had a 60+% market share and 120+% performance in all segments. Only Married Couples with an oldest child <6 spent less. The gains came because the spending by singles was essentially flat, only +0.6%.
  7. Income – Over $70K (63.4%) down from 66.3% The performance of the $70K> group fell significantly from 159.8% to 145.8%. However, higher income is still the most important factor in increased Vet spending. Only the $50>99K group spent less. The spending by the <$50K group grew by 37.0%. Those making $100K> also spent 16.4% more. The key factor in the big changes in share and performance was a 9.8% drop by the $70>99K group.
  8. Age – 35>64 (60.1%) down from 63.2% Their performance also fell from 120.7% to 112.7% and they dropped out of the 120% club. Only <25 & 35>44 yr olds spent less. All other groups had double digit % increases. The drop by 35>44 yr-olds in conjunction with a 52.1% lift by 25>34 caused the big loss in share and performance.
  9. Education – College Grads (61.3%) down from 63.9% Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Performance also fell from 144.1% to 131.2%. Education lost share and performance but moved up to 2nd from 3rd in importance. Only those without a HS diploma spent less. The big drop in share and performance came from a 48.2% lift by HS Grads without a BA/BS. Veterinary Services are very important. The pandemic caused this need to become recognized by more education levels.
  10. Occupation – All Wage & Salaried (68.1%) up from (67.3%) but their performance only increased from 110.3% to 110.7%. Tech/Sls/Clerical and Retirees spent less while most of the lift was driven by Managers & Professionals. However, the largest percentage increase was from the Self-Employed. This combination slowed the gains. It also reinforces that “the bosses” ruled in 2020.

Spending did become a little more balanced but Higher income remains the biggest single factor in Veterinary spending. We see the impact of this in many groups as it often contributes to the big spending disparity between segments. The most notable change was that the 35>64 age group fell out of the 120+% club due to a big lift by the 25>34 yr olds.

Now, we’ll look at 2020’s best and worst performing Veterinary spending segments in each category.

Almost all of the best and worst performers are those that we would expect. However, there are 7 that are different from 2019. This is the same as Services but much more than the 3 in Supplies and much less than the 10 in Food. This suggests some spending turmoil. The changes from 2019 are “boxed”. We should note:

  • Income – The winner & losers are the expected groups but they are 30% closer together.
  • Earners – New, but not unexpected, winner and loser. They have the highest and lowest incomes.
  • Occupation – Once again, it’s all about income
  • Age – The highest income group, 45>54 yr-olds returned to the top. Despite a strong showing by the 25>34 group, only those from 35>74 perform above 100%.
  • Race/Ethnic; Education; Housing – The usual winners and losers but the performance gap narrowed a bit.
  • Area – A fundamental change in the loser based upon population. Last year it was Rural. This year it’s Center City.
  • Region – After winning for 5 straight years, the Northeast was replaced by the West at the top. The West is also the only region performing above 100%. The South has now finished last for 5 years in a row.
  • CU Composition – No change here but again the performance gap narrowed a little, 10%.
  • # in CU – Only 2 & 3 person Cu’s perform above 100%. We have seen spending movement to larger CUs. This is very apparent in Veterinary as the 5+ group spent 67% more and moved up a little after 2 years at the bottom.
  • Generation – The loser flipped from the oldest to the youngest and the performance gap widened by 30%.

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Veterinary Spending.

We saw some turmoil in performance. There was even more here. There were 4 repeats and 10 segments flipped from 1st to last or vice versa. Last year they had 8 repeats and 4 flips. There were some surprise winners – 25>34 yr-olds & Center City but no surprise losers. In fact, in 4 categories all segments spent more. You should also note the increases were significantly larger than the decreases and 85% of 96 demographic segments spent more. Here are the specifics:

  • Occupation – The winner and loser flipped with the “Bosses” returning to the top.
    • Winner – Mgrs & Professionals– Veterinary Spending: $9.87B; Up $2.11B (+27.1%)                      2019: Tech/Sales/Clerical
    • Loser – Tech/Sales/Clerical – Veterinary Spending: $3.42B; Down $0.27B (-7.4%)                          2019: Mgrs & Profess.
    • Comment – The highest income groups – Self-Employed and Mgrs & Professionals accounted for 90% of the increase. Blue Collar workers did spend $0.41B more but Retirees spent a little less, -0.04B (-1.0%).
  • Region – The Northeast flipped from 1st to last. They have now flipped for 3 consecutive years.
    • Winner – West – Veterinary Spending: $7.01B; Up $2.08B (+42.1%)                                                    2019: Northeast
    • Loser – Northeast – Veterinary Spending: $4.10B; Down $0.98B (-19.3%)                                         2019: Midwest
    • Comment – The South finished 2nd for the 4th consecutive year. All but the Northeast had double digit % gains.
  • Race/Ethnic – Both groups held their spots as White, non-Hispanics maintained their dominance in this segment.
    • Winner – White, Not Hispanic – Veterinary: $21.67B; Up $1.85B (+9.3%)                                       2019: White, Not Hispanic
    • Loser – African American – Veterinary: $0.87B; Up $0.30B (+51.8%)                                               2019: African Americans
    • Comment– In 2019 only African Americans spent less. In 2020 everyone spent more. This shows that Pet Parents’ commitment to the health & wellbeing of their Pet Children is widespread across all racial/ethnic groups.
  • Housing – Homeowners w/Mtges held their position at the top.
    • Winner – Homeowner w/Mtge – Veterinary: $14.06B; Up $1.62B (+13.0%)                                    2019: Homeowner w/Mtge
    • Loser – Renter – Veterinary: $4.19B; Up $0.53B (+14.5%)                                                                      2019: Homeowner w/o Mtge
    • Comment – Every segment spent more and in fact, Homeowners w/Mtges had the lowest percentage increase. They won because they account for 56.6% of all Veterinary spending.
  • # in CU – Both the winner and loser flipped.
    • Winner – 2 People – Veterinary Spending: $9.73B; Up $1.50B (+18.3%)                                              2019: 1 Person
    • Loser – 1 Person – Veterinary Spending: $5.48B; Up $0.03B (+0.6%)                                                   2019: 2 People
    • Comment: Again, all groups spent more. 4 Person CUs and singles had increases under 2% while everyone else was in double digits, led by 5+ CUs who were up 67%.
  • Generation – Baby Boomers flipped from last to first as they focused on their Pets’ needs – Food & Veterinary.
    • Winner – Baby Boomers – Veterinary: $8.93B; Up $1.45B (+19.4%)                                                  2019: Millennials
    • Loser – Gen Z – Veterinary: $0.20B; Down $0.06B (-22.5%)                                                                  2019: Baby Boomers
    • Comments – After 2 years at the bottom Boomers returned to the top. Millennials also had a good year, +$1.1B. Gen Z was the only generation to spend less.
  • Area Type – Center City is a bit of a surprise and the big suburbs flipped from 1st to last.
    • Winner – Center City – Veterinary Spending: $8.17B; Up $1.35B (+19.8%)                                       2019: Suburbs 2500>
    • Loser – Suburbs 2500> – Veterinary Spending: $11.57B; Up $0.36B (+3.2%)                                   2019: Suburbs <2500
    • Comment – All groups also spent more. The question became “How much more?” With 33% of the $ and a 20% increase, Center City won. Suburbs 2500> have 47% of $ but were only +3%. By the way, Rural was +80%.
  • CU Composition – Married Couple Only flipped from last to 1st.
    • Winner – Married, Couple Only – Veterinary: $7.04B; Up $1.31B (+22.9%)                                2019: Singles
    • Loser – Married, Oldest Child <6 – Veterinary: $0.95B; Down $0.21B (-18.2%)                          2019: Married, Couple Only
    • Comment – After a $0.72B increase in 2019, the loser was the only segment to spend less. Single Parents spent 68% more but 63% of the total $ increase came from Married Couples Only and those with a child over 18.
  • # Earners – Both the winner and loser are new, but not surprising.
    • Winner – 3+ Earners – Veterinary Spending: $3.26B; Up $1.15B (+54.2%)                                     2019: 2 Earners
    • Loser – No Earner, Single – Veterinary Spending: $1.45B; Down $0.51B (-26.1%)                        2019: 1 Earner, 2+ CU
    • Comment – The winner and loser have the highest and lowest incomes and No Earner, Singles were the only group to spend less. Income is of primary importance to increased Veterinary Spending & # of earners is important. However, not every adult has to work. 1 Earner, 2+ Person CUs was only beaten by $0.03B.
  • Income – $100>149K flipped from last to first.
    • Winner – $100>149K – Veterinary Spending: $5.04B; Up $1.14B (+29.1%)                                    2019: <$30K
    • Loser – $70>99K – Veterinary Spending: $3.74B; Down $0.41B (-9.8%)                                          2019: $100>149K
    • Comment – Two groups spent less, $50>69K & $70>99K. Last year we had a definite spending rollercoaster. It’s still here in 2020, but with bigger groups. <$50K: +$1.82B; $50>99K: -$0.48B; $100K>: +$1.69B.
  • Age – In a bit of a surprise, the 25>34 yr-olds won while 35>44 flipped from 1st to last.
    • Winner – 25>34 yrs – Veterinary Spending: $3.74B; Up $1.11B (+42.2%)                                       2019: 35>44 yrs
    • Loser – 35>44 yrs – Veterinary Spending: $4.47B; Down $0.59B (-11.6%)                                       2019: 45>54 yrs
    • Comment: Two groups spent less, the 35>44 yr-olds and the <25 group. Everyone else had double digit percentage increases. The 25>34 group is only 4th in income and 5th in Veterinary spending performance so their win is unexpected. Apparently, they were motivated by the pandemic. Their Services $ were flat but they spent a lot more in all other segments.
  • Education – Those with an Advanced College Degree held their spot at the top.
    • Winner – Adv. College Degree – Veterinary Spending: $7.41B; Up $0.88B (+13.4%)                 2019: Adv. College Degree
    • Loser – <High School Grads – Veterinary Spending: $0.34B; Down $0.14B (-29.4%)                2019: Associates Degree
    • Comment – Only those without a HS Diploma spent less. College grads were up $1.29B (+9.3%). However, those with a HS Diploma but not a BA/BS spent $1.89B (+25.6%) more so the lift was widespread.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. The 2020 pandemic brought strong  growth in Veterinary spending. However, there was some turmoil as only 4 segments held their spot from 2019 while 10 flipped from first to last or vice versa, but with almost no surprising winners. The surprise was in how widespread the spending lift was. In 4 categories, no segments spent less and overall, 85% of all demographic segments spent more. This means that there were “hidden” segments that didn’t win but made a significant contribution to the $3B increase. These groups don’t win an award, but they certainly deserve….

HONORABLE MENTION

Center City won but Rural came in second – the opposite ends of the population spectrum. Income matters as Self-Employed finished 2nd to Managers & Professionals. However, spending became a little more balanced in both Income & Education which is reflected by the performance of the $30>39K, 1 Earner, 2+CU and HS Grads w/some College groups. It also wasn’t all about Baby Boomers and Gen X. The younger Millennials certainly stood up with a $1B increase in spending. There are many more groups that could be included as 82 of 96 segments (85%) spent more on Veterinary Services. That is significantly better than 57% in 2019 and 63% in 2018. 2020 was a good year!

Summary

2016 and 2017 produced a combined increase of $3.6B in Veterinary Spending as inflation moved to record low levels. In 2018 we had the Baby Boomer Spending “Bust” which especially impacted Food and Veterinary. The Boomers spending continued to fall in 2019. Fortunately, Gen X and Millennials stepped up to produce a small. 2.7% increase in both years. In 2020 the pandemic focused Pet Parents on the needed segments. This drove a $3B increase in Veterinary $. Boomers & Millennials led the way, but the lift was widespread as 85% of demographic segments spent more.

There was some turmoil in the segment, but the net result is that spending became a little more balanced in most demographic categories. In general, the size of the increases far exceeded the size of the decreases. In fact, in 4 categories all segments increased spending. Income and Education remain of primary importance in terms of increased spending.

Income: Performance generally increases with income and reaches it’s highest level, nearly 200% at $150K>. The “halfway” point (50%) occurred at $70>99K in 2020. This is the 1st time that the halfway point has fallen below $100K. Spending may be more balanced, but you can see that there is still a huge disparity.

Higher Education: Performance increases with Education but doesn’t reach 100% until you have a BA/BS degree. The performance of HS Grads with an Associate Degree or at least some college is now over 90%. Those with a College Degree perform at 131%. The disparity is not as bad as Income but still big. Equality in both categories is a long way off.

The performance of other big spending groups is also very important in the Veterinary segment. We identified six demographic categories with high performing large groups. (There were 5 for Supplies and Services but 8 for Food).  Consumers have no control over Race/Ethnicity but in addition to Income and Education, Homeownership, # Earners & Marriage are also important factors in Veterinary spending. All groups but Marriage are tied to income and their high performance demonstrates that there are still big spending disparities among segments within these categories.

There were some changes of note. Marriage returned to prominence while a strong year by the 25>34 yr-olds drove the performance of the 35>64 age group significantly down.

In 2019 Veterinary spending increased +2.7% while prices rose 4.14% – a net decrease in the amount of Services. In 2020 spending grew +14.0% while inflation was 3.7%. That’s over 10% in real growth, a very positive situation. Also, although Boomers and Millennials drove the lift, increases were widespread across demographics making Veterinary spending more balanced. In 2021, the overall U.S. economy has largely recovered. We’ll see if Pet Parents continue to spend heavily on Veterinary Services.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 3 people – a married couple and their 18 yr old child. They are 45 to 54 years old. They are White, but not of Hispanic origin. At least one of them has an Adv. College Degree. Both are Mgrs/Professionals and their child also works. Their total income is $150>$200K. They live in a small suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage on their home.