Retail Channel Monthly $ Update – September Final & October Advance

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In October, Commodities inflation fell from 1.4% to 0.4%. Although down from its peak, inflation still impacts consumer spending. The sales increase rate is lower than the inflation rate in a number of channels, which indicates a drop in the amount of product sold. A recovery may have started but there is still a long road ahead, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in a targeted CPI from US BLS data.

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 will begin with the September Final Report and then go to the Advance Report for October. Our focus is comparing to last year but also 2021 & 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’ll focus on Pet Relevant Channels.

The data will be presented in detailed charts to facilitate visual comparison between groups/channels. The charts will show 11 separate measurements. To save space they will be displayed in a stacked bar format for the channel charts.

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2022 and 2021.
    • Current Month Real change for 2023 vs 2022 and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for 2023 vs 2022, 2021 and 2019.
    • Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
  • Monthly & Ytd $ & CPIs for 22>23 and 21>23 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the September Final. All were down from August but all, but Gas Stations were up vs 22, 21 & 19. When you consider inflation, the # of real drops vs 22 & 21 (6) was down from August (8). Gas Stations are still really down vs 2019. A significant fact to note is that Relevant Retail is again “really” up monthly vs 22. (All $ are Not Seasonally Adjusted)

The September Final is $2.3B more than the Advance. Specifically, Restaurants: +$0.9B; Auto: +$0.5B; Gas Stations: +$0.1B; Relevant Retail: +$0.7B. $ were down vs August for all, but actual sales for all but Gas Stations were positive in all measurements vs 22, 21 & 19. Gas prices turned up and Gas Stations sales dropped again monthly & YTD vs 22. There were 7 “real” sales drops, 5 from Gas Stations. Restaurants and now Total Retail are the only groups with all positives. Monthly real sales for Relevant Retail vs 22 are up again but have been down in 15 of the last 19 months. Their YTD real measurement vs 22 is still negative. They are the top “real” performer vs 2019 but only 48% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in September in the Stacked Bar Graph Format

Overall– Only 1 was up from August, but vs 22, 7 were up vs Sep. and 8 YTD. 5 were “really” up monthly & 4 Ytd. Vs 2021, 10 had increases but only 6 monthly & 3 Ytd were real. Vs 2019, Off/Gift/Souv & Disc Dept Strs were really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 34.9% since 2019. Prices for the Bldg/Matl group have inflated 19.6% since 2021 which is having an impact. HomeCtr/Hdwe stores are down monthly & Ytd vs 22 but up vs 21 &19. Farm Stores are up in all measurements. However, both have all negative real numbers vs 2022 & 2021. Importantly, only 20.6% of their 19>23 lift was real. It was only this high because most of the lift came prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 7.1%, Real: 1.2%; Farm: 11.6%, Real: 5.4%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. They have been very different in inflation and the situation has flipped as the Grocery rate is now 43% lower than Drug/Med products. Drug Stores are positive in all measurements and 73% of their growth since 2019 is real. While the $ are all up for Supermarkets, their 23 real sales are down vs 22 & 21 and just slightly positive vs 2019. Only 7% is real growth. Avg 19>23 Growth: Supermarkets: +6.3%, Real: +0.5%; Drug Stores: +5.8%, Real: +4.3%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -16.9% from August. Their only positives are YTD vs 22, monthly vs 21 and YTD vs 19. Prices are still deflating, -0.1% and YTD they’re flat, a big change from +5.4% in 21>22 and +6.5% in 20>21. The result is that 60% of their 42.8% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.3%; Real: +5.8%.
  • Gen Mdse Stores – All were down vs August but actual sales vs 22, 21 & 19 were up for all but Disc Dept Stores vs 22. In real sales Clubs were only down YTD vs 22 & 21. $/Value Stores were only down YTD vs 21. Disc Dept Stores are the worst performer and again are really down vs 2019, -1.0%. The other channels average 36% In real growth. Avg 19>23 Growth: SupCtr/Club: 6.3%, Real: 2.4%; $/Value Strs: +6.8%, Real: +2.8%; Disc. Dept.: +2.4%, Real: -0.25%
  • Office, Gift & Souvenir Stores – Actual sales are down from August and in all measurements but YTD vs 21 & 19. Their real sales numbers are all negative including -6.5% Ytd vs 2019. Their recovery started late, and their slow progress has stalled in Jun>Sep. Avg Growth Rate: +1.0%, Real: -1.7%
  • Internet/Mail Order – Sales are down from August and fell below $100B, but still set a record for the month. All measurements are positive, but their growth is only 47% of their average since 2019. However, 79% of their 95% growth since 2019 is real. Avg Growth: +18.2%, Real: +15.1%. As expected, they are still by far the growth leaders since 2019.
  • A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level of $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December, fell in Jan>Feb 23, grew Mar>May, fell in Jun>Aug, then rose in Sep. All measurements but real YTD vs 2022 are positive. They fell to 2nd place in the % increase vs 2021 but 72% of their 54.8% growth since 2019 is real. Average 19>23 Growth: +11.5%, Real: +8.6%. They also dropped from 2nd to 3rd in growth since 2019, behind the Internet & Farm Stores.

Inflation remains an important factor in Retail. In actual $, 7 channels reported increases in sales vs 2022 and 10 vs 2021. When you factor in inflation, the number with “real” growth drops to 5 vs 2022 and 6 vs 2021. Inflation’s impact may be slowing but it is still lowering sales increases. The September lift vs 2022 was less than 50% of Jan/Feb. The impact is also visible in specific retail channels. The CPI fell in October. Let’s look for any impact in the Advance Retail $ales

The big change from September is that all but Auto and 3 small channels are up from last month. In September, all were down. Actually, this is truly the norm. 2009 is the only year since 1992 in which Total Retail sales fell Sep>Oct. The average increase is 3.4% so the 2.3% lift in 2023 is considerably smaller. On the plus side, all actual $ measurements are again positive vs 22, 21 & 19 for all big groups but Gas Stations. However, you will also see that the lifts vs 2022 are still low. Inflation is a big factor. However, the national CPI slowed from 3.7% to 3.2% and the all commodities rate, which is the best pricing measure for Retail, fell from 1.4% to 0.4%. There is some significant “real” good news. The big groups have 20 “real” sales measurements vs 22 & 21. In September and again in October, only 6 were negative and 4 of those came from Gas Stations. Relevant Retail’s real monthly sales vs 22 have now been positive for 4 straight months. Note: The monthly % lift vs 22 for Relevant & Total Retail is still less than half of Jan & Feb levels

Overall – Inflation Reality – Gas prices fell, and Auto prices are still down vs 22. For Total Retail, the rate was again below the sales lift and all real sales are positive. For Restaurants, inflation remains high, +5.4% but they are still really positive vs 22 & 21. Monthly real sales for Relative Retail vs last 22 are positive again. That’s 5 of the last 6 months but only 5 of the last 20. Also, again only their Ytd Real sales vs 2022 are down. They continue to make slow progress.

Total Retail – Since June 2020, every month but April 23 has set a monthly sales record. December 22 $ were $748.9B, a new all-time record. Sales have been on a rollercoaster. Up in July & Aug, down in September, then up in October. Inflation is only 0.4% but sales growth is still low. Sales are up 2.7% vs last year. That’s only 34% of their average 19>23 growth. All real sales measurements are again positive but only 35% of the 19>23 growth is real. Inflation in Total Retail has radically slowed vs 2022 but we still see its cumulative impact. Avg 2019>23 Growth: +7.9%, Real: +2.9%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, setting an all-time monthly record of $91B in December and exceeding $1T in 2022 for the 1st time. They have the biggest increases vs 22, 21 & 19 and all real sales are positive. Inflation slowed to 5.4% from 6.0% last month but is still +14.3% vs 21 and +22.1% vs 19. 37.7% of their 40.9% growth since 19 is real but they remain 2nd in performance behind Relevant Retail. Recovery started late but inflation started early. Avg 2019>23 Growth: +8.9%, Real: +3.6%. They just account for 13.2% of Total Retail $, but their performance improves the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – They 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 but much of it was due to skyrocketing inflation. In 22 sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual sales which are the only reported sales negatives by any big group in 21>22. This is bad but their real 22 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 is a true rollercoaster. $ grew in Jan>Feb, fell Mar>Apr, grew in May, fell Jun>Jul, grew in Aug, fell in Sep, then grew in Oct. Only Ytd real sales vs 21 are down. Prices vs 22 are -2.1% monthly & -1.6% Ytd. Only 6% of 19>23 growth is real. Avg 2019>23 Growth: +6.7%, Real: +0.5%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb 23, strongly dropped in Mar>Jul to -20.2%. In August they turned up to -3.7%. In Sep they were +2.7% but fell to -5.6% in Oct. Pricing is a big factor in the monthly & Ytd sales drops vs 22. Real sales vs 22, 21 & 19 are down both monthly & YTD.  Avg 2019>23 Growth: +6.6%, Real: -1.3%. The numbers show the cumulative impact of inflation and demonstrate how strong deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for 60+% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, Jan & Feb had normal drops then grew in March, starting another roller coaster. Sales fell in Jun>Jul, turned up in Aug, fell in Sep, then grew in Oct. Actual sales are up vs 22, 21 & 19. Real sales are only down Ytd vs 22. Monthly Real sales vs last year are again up. That’s 5 of the last 6 months, but only 5 of the last 20. 48% of their 19>23 growth is real – #1 in performance. Avg 2019>23 Growth is: +8.3%, Real: +4.2%. This group is where America shops. Another month of positive real sales is a good sign.

Inflation is still low but the cumulative impact is still there. Sales increases are still small, but the fact that 88% of all Non-Gas Station real sales numbers vs 22 & 21 are still positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused a drop in Gas Stations’ actual sales. Our biggest concern is Relevant Retail. Their situation is improving. Ytd real sales vs 22 are still negative, which shows the impact of cumulative inflation, but monthly real sales vs 22 have now been positive in 5 of the last 6 months. The slow turnaround continues.

Here’s a more detailed look at October by Key Channels in the Stacked Bar Graph Format

  • Relevant Retail: Avg Growth Rate: +8.3%, Real: +4.2%. 8 of 11 were up from September but only 7 were up vs 22 & vs 21. Only 4 had a “real” increase vs 22 & 3 vs 21. Inflation continues to slow sales increases.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their Actual $ are up from September but down for all comparisons but Ytd vs 21 & 19. Their real sales are down in all measurements, even vs 2019. Avg 2019>23 Growth: +0.2%, Real: -2.5%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are up from September and in all other measurements. Their real sales are down monthly vs 22 and Ytd vs 22 & 21. Only 36% of their 28.4% 19>23 lift is real – the impact of inflation. Avg Growth: +6.5%, Real: +2.5%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are up from September and in all measurements vs 22, 21 & 19. However, inflation hit them hard. Real sales are down for all but Ytd vs 2019 and only 5.9% of the growth since 2019 is real. Avg Growth: +6.2%, Real: +0.4%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are up from September and positive in all other measurements, actual and real vs 22, 21 & 19. Inflation has been relatively low so 72% of their 25.4% growth from 2019 is real. Avg 2019>23 Growth: +5.8%, Real: +4.3%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Actual $ales are up from September and only down vs Oct 22. Their real sales are now down monthly and Ytd vs 22 & 21. However, 64% of their 19>23 growth is real. Avg 2019>23 Growth: +3.9%, Real:+2.5%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were high in 2022. Sales are down from September and negative in all other measurements but actual Ytd vs 2019. Their real sales are even down -3.6% vs 2019. Avg 2019>23 Growth: +3.0%, Real: -0.9%.
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. $ales are down from September and in all measurements but vs Oct 22 and Ytd vs 19. However, consistent deflation has caused real sales to be up in all measurements. Avg 2019>23 Growth: +0.6%, Real: +2.7%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. Inflation is still high at 4.2%. Sales are up from September, but they are again all negative vs 2022. They have the 2nd highest Inflation of any channel so real sales are negative in all but Ytd vs 2019. Also, just 20% of their sales growth since 2019 is real. Avg 2019>23 Growth is: +7.7%, Real: +1.7%.
  • 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. Actual $ales are down from September, but positive for all but vs Oct 22 & 21. Real sales are down for all but YTD vs 22 & 19. Prices deflated again and their inflation rate has been lower than most groups so 66.2% of their 29.3% growth since 2019 is real. Avg 2019>23 Growth: +6.6%, Real: +4.5%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are up vs September and positive in all measurements. Real sales are only down vs Oct & Ytd 22. They are 2nd to NonStore in increases vs 21 & 19. 65% of their 41.1% 19>23 growth and 46% of their 21>23 growth is real. Their Avg 19>23 Growth is: 9.0%, Real: 6.1%.
  • 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 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 2022 and now 2023. $ are up from September and in all other measurements. 78% of their 86.5% growth since 2019 is real. Their Avg Growth: +16.9%, Real: +13.7%.

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 and by the end of 2021 it had become very widespread. In 2022, there was a new challenge, the worst inflation in 40 years. Overall, inflation has slowed considerably from its peak in June 2022, which should help the Retail Situation. Sales were up from September for all big groups & most channels. Inflation is slowing in many channels and even deflating in a few. However, some channels like Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling. Only a few channels are doing well. The new problem is that the sales increase rate vs 2022 for many channels has slowed and is even below the lower inflation rate. Real monthly sales for Relevant Retail have been positive vs 22 for 5 of the last 6 months but are still negative for 7 of 11 channels. The turnaround for Relevant retail is not widespread. It is primarily being driven by NonStore with a little help from Health Care. October was again a mixed bag of pluses and minuses. We still have a long way to go for a full recovery from the inflation tsunami.

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 of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates. The data also includes the CPI changes from 2021 to 2023 to show cumulative inflation.

Monthly 22>23 CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)

I’m sure that 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 actual product mix is different.

Petflation 2023 – October Update: Down to +5.2% vs 2022

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Inflation continues to slow but is still far above the norm. The huge YOY increases in the monthly Consumer Price Index peaked in June 2022 at 9.1% then began to slow until turning up in July & August 2023. In October prices dropped 0.04% from September and the CPI  fell to +3.2% from +3.7% vs 2022. Grocery inflation also continued to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +2.1%, 8 consecutive months below 10%. As we have learned, 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.

Petflation was +4.1% in December 2021 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed considerably since June 2022, but Petflation generally increased until June 2023. It passed the National CPI in July 2022 and at 5.2% in October, it is still 62.5% above the national rate of 3.2%. 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 23 vs 22 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • 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 October 2021 to October 2023. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. 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 yearend and those from 12 and 24 months earlier are included. We also added and highlighted (pink) the cumulative price peak for each segment. In October, Pet prices were up from last month overall and in all segments but Non-Vet Services.

In October 21, the CPI was +7.6% and Pet prices were +3.4%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation took off. Food prices grew consistently but the other segments had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices continued to grow while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month except for 1 dip by Supplies. In May Products prices grew while Services slowed. In June/July this was reversed. In August all but Services fell. In Sep/Oct this was reversed. Petflation has been above the CPI since Nov 22.

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 21 and continued to grow until flattening out in Jul>Dec 22. Prices turned up Jan>Sep, then dipped in October, but 35% of the 19.7% increase in the 46 months since December 2019 happened in the 6 months from January>June 2022 – 13% of the time.
  • Pet Food – Prices were at or below Dec 2019 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. In Jun>Aug they dipped but grew again in Sep/Oct. 93% of the 23.1% increase has occurred since 22.
  • Pet Supplies – Supplies prices were high in Dec 19 due to added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to Dec 19 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct setting a new record. Prices stabilized in Nov>Dec but turned up in Jan>Feb 23, a new record. They fell in March, peaked at a new record high in May, fell in Jun>Aug, then grew in Sep>Oct.
  • 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 was stronger in 2022 but it got on a rollercoaster in Mar>June. It turned up again July 22>Mar 23 but the increase slowed to +0.1% in April. Prices fell -0.3% in May, turned up again, peaking in Aug, then fell in Sep>Oct.
  • Veterinary – Inflation has been consistent. Prices turned up in March 20 and grew through 21. A surge began in December 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the National CPI. However, prices rose again and despite some dips they have stayed above the CPI since July 22. In 23, prices grew Jan>May, stabilized Jun>Jul, fell in Aug, then grew Sep>Oct to a new high.
  • Total Pet – Petflation is a sum of the segments. In December 21, the pricing surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December, turned up Jan>May 23, fell in Jun>Aug, then grew in Sep>Oct. Except for 5 monthly dips, prices in all segments increased monthly Jan>Jun 23. In Jul>Aug there 5 more dips but only 2 in Sep>Oct. Cumulative Petflation has been above the CPI since Nov. 22.

Next, we’ll turn our attention to the Year Over Year inflation rate change for October and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation fell again to 5.2% in October, but it is still over 1.6 times the National rate. The chart will allow you to compare the inflation rates of 22>23 to 21>22 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were -0.04% from September but were +3.2% vs October 22, down from +3.7% last month. Grocery inflation is down again, to +2.1% from +2.4%. Only 2 of 9 categories had a price decrease from last month – Pet Services & the National CPI. There was only 1 in September, but 4 in August. That’s 2 consecutive monthly decreases for Pet Services. The national YOY monthly CPI rate is down to 3.2% from 3.7% in Aug>Sep and is only 42% of the 21>22 rate. The 22>23 inflation rate is below 21>22 for all categories for the 2nd consecutive month. In our 2021>2023 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in only 4 segments – Total Pet, Pet Food, Pet Supplies and Veterinary – All Pet. We should also note that the segments with the lowest percentages are Haircuts, Pet Services and Medical Services. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Services expenditures account for 61.8% of the National CPI so they are very influential. We also see that Pet Products have a very different pattern. The 21>23 inflation surge provided 94.8% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period.

  • U.S. CPI– Prices are -0.04% from September. The YOY increase is 3.2%, down from 3.7%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 85% higher than the target. After 12 straight declines, we had 2 lifts, then a stable month and now another drop – good news! The current inflation rate is 58.4% below 21>22 but the 21>23 rate is still 11.2%. That is 57% of the total inflation since 2019, but it is now below 60%.
  • Pet Food– Prices are +0.1% vs September and +6.5% vs October 2022, down from 7.6%. However, they are still 3.1 times the Food at Home inflation rate. The YOY increase of 6.5% is being measured against a time when prices were 15.4% above the 2019 level, but that increase is still 1.8 times the pre-pandemic 3.7% increase from 2018 to 2019. The 2021>2023 inflation surge has generated 98.3% of the total 22.9% inflation since 2019.
  • Food at Home – Prices are up +0.3% from September. The monthly YOY increase is 2.1%, down from 2.4% in September and radically lower than Jul>Sep 2022 when it exceeded 13%. The 25.8% Inflation for this category since 2019 is 32% more than the national CPI and remains 2nd to Veterinary. 57% 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 started early and foreshadowed problems in other categories and the overall CPI tsunami.
  • Pets & Supplies– Prices were up +0.1% from September but down -1.2% vs October 2022. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. However, even with recent price drops the 2021>2023 inflation surge accounted for 92% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 straight months of increases pushed them to a new record high in February. Prices fell in March, bounced back in Apr>May to a new record high, fell in Jun>Aug, then turned up in Sep>Oct.
  • Veterinary Services – Prices are up +0.4% from September. They are +8.1% from 2022 and took the #1 spot from Food in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 29.1% compared to Food at home at 25.8%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 69% of the 4 years’ worth of inflation occurred in the 2 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 20>21. Prices grew 0.2% from September but are -2.0% vs 22. Prices have now deflated for 6 straight months. Medical Services are not a big part of the current surge as only 38% of the 2019>23 increase happened from 21>23.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. October 23 prices were -0.4% from September but +4.7% vs 22, which is down from 6.0% last month and much lower than 8.0% in March. Now, only 55% of their total 20.6% inflation since 2019 occurred from 21>23.
  • Haircuts/Other Personal Services – Prices are up 0.4% from September and +5.0% from 2022, up slightly from 4.8% last month. Inflation has been rather consistent as 50% of the inflation from 19>23 happened from 21>23.
  • Total Pet– Petflation is now 55% lower than the 21>22 rate, but still 1.6 times the National CPI. For October, +5.2% is the 4th highest rate since 1997 (2022: 11.6%; 2008: 9.7%; 2007: 5.5%). Vs September, prices again grew for all but Services so Total Pet was +0.2%. A Sep>Oct increase has happened in 17 of the last 24 years so it was not a surprise. Veterinary & Food are still the Petflation leaders, but all segments have an influence. Pet Food has been immune to inflation as Pet Parents are used to paying a lot, but inflation can reduce purchase frequency in the other segments.

Now, let’s look at the YTD numbers

The increase from 2022 to 2023 is the biggest for 4 of 9 categories – All Pet. The 22>23 rate for Haircuts is slightly below 21>22. However, the Total CPI, Pet Supplies, Medical Services and Food at Home are significantly down from 21>22. The average annual increase since 2019 is 4.5% or more for all but Medical Services (2.8%) and Pet Supplies (2.5%).

  • U.S. CPI – The current increase is down 48% from 21>22 and 4.4% less than the average increase from 2019>2023, but it’s 65% more than the average annual increase from 2018>2021. 68% of the 19.1% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
  • Pet Food – Strong inflation continues with the highest 22>23 & 21>23 rates on the chart. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022. 96% of the inflation since 2019 occurred from 2021>23.
  • Food at Home – The 2023 YTD inflation rate has slowed but still beat the U.S. CPI by 35%. You can see the impact of supply chain issues on the Grocery category as 70% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – Although prices rose in October, the YTD inflation rate is down to 3.3%. Prices deflated significantly in both 2020 & 2021 which helped to create a very unique situation. Prices are up 10.4% from 2019 but 106% of this increase happened from 2021>23. Prices are up 11.0% from their 2021 “bottom”.
  • Veterinary Services – They are still #1 in inflation since 2019 but they have only the 2nd highest rate since 2021. At +6.4%, they have the highest average annual inflation rate since 2019. Except for a sight slowing in 2020, inflation has consistently increased since 2019. Regardless of the situation, strong Inflation is the norm in Veterinary Services.
  • 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 -0.3% YTD, the only current deflation in any segment.
  • Pet Services – May 22 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 Sep>Apr 23. The January 2023 increase of 8.4% set a new record. YTD October fell a little from 6.8% to 6.6%. Interestingly, although the rates are not as high, they have the exact same annual inflation pattern as Veterinary. The Services segments in the Pet Industry are definitely unique.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. After a small decrease in March 22, prices turned up again. Since 2021 inflation has been a consistent 5+%, 93% higher than 18>19. Consumers are paying 21% more than in 2019, which usually reduces the purchase frequency.
  • Total Pet – There were two different patterns. After 2019, Prices in the Services segments continued to increase, and the rate grew as we moved into 2021. Pet products – Food and Supplies, took 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 grew until Jun>Aug 23. Supplies prices stabilized Apr>May, grew Jun>Oct, fell in Nov, rose in Dec>Feb, fell in Mar, rose in Apr>May then fell in Jun>Aug. Both turned up in Sep & Oct. The Services segments have also had ups & downs but have generally inflated. The net is a YTD Petflation rate vs 2022 of 8.7%, double the National CPI. In May 22 it was 5.8% below the CPI.

Petflation is slowing, but still strong. Petflation dropped from 5.7% in September to 5.2% in October. This is 57% below the record 12.0% set in November, but still the 4th highest rate for the month. The last 5 months have all been <10% but 9 of 15 have been 10+%. The current 5.2% rate is still 3.3 times the 1.6% average rate from 2010>2021 and also 1.6 times the national rate. There is no doubt that the current pricing tsunami is a significant event in the history of the Pet Industry, but will it affect Pet Parents’ spending. In our demographic analysis of the annual Consumer Expenditure Survey which is conducted by the US BLS with help from the Census Bureau we have seen 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 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. This spending behavior of Pet Parents suggests that we should look a little deeper. Inflation is not just a singular event. It is cumulative. Total Pet Prices are up 5.2% from 2022 but they are up 17.4% from 2021 and 22.0% from 2019. That is a huge increase in a very short period. It puts tremendous monetary pressure on Pet Parents to prioritize their expenditures. We know that the needs of their pet children are always a high priority but let’s hope for a little relief – stabilized prices and even deflation. This is not likely in the Service segments, but it has happened before in Products. The Pet Food inflation rate has slowed for 6 straight months, and Pet Supplies prices have deflated vs 2022 in 2 of the last 3 months, including a -1.2% drop in October. It’s just a start. Let’s hope that it accelerates “down”.

2022 U.S. TOTAL PET SPENDING $102.71B…Up ↑$2.73B

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In 2022 Total Pet Spending in the U.S. was $102.71B, a $2.73B (2.7%) increase from 2021. Spending fell in Veterinary and Supplies as the record 2021 binges were not repeated. However, Pet Food returned to a more normal pattern with a 12.5% increase and Services spending continued to surge with another record lift. Together this produced a small increase in Total Pet $. Another factor also affected spending in 2022 – high inflation in all segments.

  • A $4.29B (+12.5%) increase in Food
  • A $1.86B (-7.8%) decrease in Supplies
  • A $2.95B (-9.0%) decrease in Veterinary
  • A $3.26B (+35.8%) increase in Services

Let’s see how these numbers blend together at the household (CU) level. Weekly, 25.3 million CU’s (1/5) spent $ on their Pets – food, supplies, services, veterinary or any combination – up from 24.4MM in 2021 but still below 27.1MM in 2019.

In 2022, the average U.S. CU (pet & non-pet) spent a total of $766.20 on their Pets. This was a +2.3% increase from the $748.93 spent in 2021. However, this doesn’t “add up” to a 2.7% increase in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

  • 0.4% more CU’s
  • Spent 0.5% less $
  • 2.8% more often

If 68% of U.S. CU’s are pet parents, then their annual CU Total Pet Spending was $1126.76. Now, let’s look at the recent history of Total Pet Spending. The rolling chart below provides a good overview. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys – The 2016>2022 Totals include Veterinary Numbers from the Interview survey, rather than the Diary survey due to high variation)

  • In 2014-15, the Super Premium Food upgrade began, with the biggest lift coming in 2015.
  • In 2016, Pet Parents value shopped for super premium foods. They spent more in other segments, but spending fell slightly.
  • In 2017, spending took off in all but Services, especially in the 2nd half. Consumers found more $ for their Pets.
  • In 2018, a spectacular lift in Services overcame the FDA issue in Food, tariffs on Supplies and inflation in Veterinary.
  • In 2019, a bounce back in Food and small lift in Veterinary couldn’t overcome the drop in Supplies from “tarifflation”.
  • In 2020, consumers focused on necessities, Food & Veterinary (+$8.7B) while Services & Supplies suffered (-$3.4B).
  • In 2021, there was no Food binge but in all other segments consumers made up for all the lost ground…and more!
  • In 2022, big lifts in Food & Services overcame drops in Supplies & Veterinary.
  • The 2022 lift was the 3rd in a row, breaking a pattern since 2010 – 2 years of increases followed by a small decrease.

Now we’ll look at some Demographics. First, 2022 Total Pet Spending by Income Group

Only the $30>70K & $100>149K income groups spent more but all of the big groups, <$70> & <$100k> had increases.

Nationally: · Total Pet: ↑$2.73B   · Food: ↑$4.29B  · Supplies: ↓$1.86B  · Services: ↑$3.26B  · Veterinary: ↓$2.95B

  • < $70K – (52.7% of U.S. CUs); CU Pet Spending: $472.48, +9.9%; Total $: $33.35B, ↑$1.59B (+5.0%) from…
    • Food ↑$2.60B       Supplies ↓$1.16B       Services ↑$0.46B       Vet ↓$0.30B
    • Money matters a lot to this group. In the pandemic they focused on Pet needs. In 2021 they spent less on food but more in all other segments. In 2022, their segment spending matched the national pattern and their $ grew 5.0%
  • >$70K – (47.3% of U.S. CUs); CU Pet Spending: $1093.30, -4.4%; Total $: $69.36B, ↑$1.15B (+1.7%) from…
    • Food ↑$1.69B       Supplies ↓$0.70B       Services ↑$2.81B       Vet ↓$2.65B
    • This group continues to grow in size, up 6.0% in 2022, but they only produced 42% of the spending increase. Only $100>150K spent more. They also matched the national pattern but accounted for 90% of the drop in Veterinary.
  • < $30K – (23.8% of U.S. CUs); CU Pet Spending: $349.31, +4.0%; Total $: $10.84B, ↓$0.41B (-3.7%) from…
    • Food ↑$0.08B       Supplies ↓$0.59B       Services ↑$0.23B       Vet ↓$0.13B
    • This lowest income group still has relatively stable spending but they remain committed to their pets. They also only spent less in Supplies & Veterinary but their lift in Food was so small that their Total $ fell -3.7%.
  • $30>$70K – (28.9% of CUs); CU Pet Spending: $569.03, +11.8%; Total $: $22.51B, ↑$2.00B (+9.8%) from…
    • Food ↑$2.52B       Supplies ↓$0.57B       Services ↑$0.22B       Vet ↓$0.17B
    • Another National Pattern match. However, they had the biggest lncrease in Food and the 2nd largest in Total Pet.
  • $70>$99K – (14.1% of CUs); CU Pet Spending: $766.36, -3.6%; Tot $: $14.58B, ↓$1.16B (-7.3%) from…
    • Food ↓$0.40B       Supplies ↑$0.08B       Services ↑$0.63B       Vet ↓$1.47B
    • This mid-income group is very price sensitive. They had the biggest drop in Veterinary and the only drop in Food.
  • $100K>$149K– (15.5% of CUs); CU Pet Spend: $1013.24, +3.6%; Tot $: $20.99B, ↑$2.49B (+13.4%) from…
    • Food ↑$1.25B       Supplies ↑$0.61B       Services ↑$0.69B       Vet ↓$0.06B
    • After years of stability they became reactive and they have the money to take action. In 2020 they led the way in the Food binge. In 2021 they had a huge drop in Food $ but big increases in the other segments. In 2022 they got more “on track”. They had a small drop in Veterinary but big increases in the other segments. This generated the biggest increase in Total Pet $ for any income segment.
  • $150K> – (17.7% of CUs); CU Pet Spending: $1424.79, -12.1%; Total $: $33.79B, ↓$0.18B (-0.5%) from…
    • Food ↑$0.83B       Supplies ↓$1.39B       Services ↑$1.49B       Vet ↓$1.11B
    • This group consists of 2 segments, $150>199K and $200K>. In 2021 both groups had double digit increases in all segments and they generated 87% of the Total Industry’s Record Increase. 2022 was different. The $150>199K group had a small increase in Food and big lifts in Supplies & Services but were down -$1.5B in Veterinary. Net: +$0.23B. The $200K> group had a huge increae in Services and strong lifts in Food & Veterinary but a -$2.68B drop in Supplies. Net: -$0.41B. High incomes can have different behaviors but together they do 32.9% of Pet $.
  • < $100K – (66.8% of CUs); CU Pet Spending: $534.79, +5.4%; Total $: $47.93B, ↑$0.43B (+0.9%) from…
    • Food ↑$2.20B       Supplies ↓$1.08B       Services ↑$1.09B       Vet ↓$1.77B
    • A spending sandwich, with the “meat” in the middle  <40K: -$0.54B; $40>69K: +$2.13B; $70>99K: -$1.16B
  • >$100K – (33.2% of CUs); CU Pet Spending: $1232.94, -6.3%; Total $: $54.78, ↑$2.30B (+4.4%) from…
    • Food ↑$2.09B       Supplies ↓$1.78B       Services ↑$2.17B       Vet ↓$1.18B
    • The $100K> group exceeded 50% of Pet $ for the 1st time in 2020. Their lead is growing as they now do 53.3%.

Income Recap –  The top 2 drivers in consumer spending behavior are value (quality + price) and convenience. That makes income very important in Pet Spending. We also often see motivation brought by new products. In 2020 we saw the results from perhaps the biggest human motivator – fear. This drove the binge buying of pet food. The huge lift from $100>149K helped push the 50/50 $ divide up to $103K, a huge change from $94K in 2019. 2021 brought a record lift and record spending in all segments but Food. This increase was driven by the $150K> income group and the 50/50 spending divide moved up to $107K. In 2022, Food & Services $ grew while Vet & Supplies fell. This produced a small, 2.7% increase in Total Pet $. However, a big lift by the $100>149K segment pushed the spending divide up slightly to $108K. Income continues to grow in importance in Total Pet Spending.

Next let’s look at 2022 Total Pet Spending by Age Group

The 25>44 and 75> yr-old groups spent less while all others spent more. The 45>54 group had the biggest increase.

Nationally: · Total Pet: ↑$2.73B   · Food: ↑$4.29B  · Supplies: ↓$1.86B  · Services: ↑$3.26B  · Veterinary: ↓$2.95B

  • <25 – (4.7% of U.S. CUs); CU Pet Spending: $386.78, +43.4%; Total $: $2.56B, ↑$0.77B (+42.8%) from…
    • Food ↑$0.72B       Supplies ↑$0.11B       Services ↓$0.02B       Vet ↓$0.04B
    • Many consolidated into bigger CUs and some got married but their Pets were included. Plus, more pets were added which generated a huge lift in Food. Overall, 5.1% fewer CUs spent 55.9% more $, 3.6% less often.
  • 25-34 – (15.6% of U.S. CUs); CU Pet Spending: $687.59, -1.9%; Total $: $14.48B, ↓$0.42B (-2.8%) from…
    • Food ↓$0.11B       Supplies ↓$0.06B       Services ↑$0.54B       Vet ↓$0.80B
    • In 2021 these Millennials had a 20% increase with a big lift in all segments. In 2022 they dialed back their spending in all but Services, with a big drop in Veterinary as 0.6% fewer CUs spent 3.6% less $, but 1.4% more often.
  • 35-44 – (17.0% of CUs); CU Pet Spending: $822.61, -12.3%; Total $: $19.05B, ↓$2.34B (-10.9%) from…
    • Food ↑$1.56B       Supplies ↓$2.81B       Services ↑$0.36B       Vet ↓$1.45B
    • They have the largest families and are building their careers, so they are very sensitive in times of change. In 2021 they spent more in all segments and became #1 in Total Pet $. In 2022 they matched the national pattern with big changes in every segment. 0.5% fewer CUs spent 12.3% less $, but 2.0% more often. They fell to #3 in Pet spending.
  • 45-54 – (16.9% of U.S. CUs); CU Pet Spending: $967.31, +16.8%; Total $: $21.80B, ↑$3.29B (+17.8%) from…
    • Food ↑$1.29B       Supplies ↑$0.42B       Services ↑$0.78B       Vet ↑$0.80B
    • They have the highest income and were #1 in Pet Spending in 2018. In 2019 & 2020 their spending and rank fell. In 2021, their spending started to grow. In 2022 they were the only group with an increase in all segments. They are #1 in CU spending but 2nd in $ because of fewer CUs. 1.8% more CUs spent 12.7% more $, 2.6% more often.
  • 55-64 – (18.2% of U.S. CUs); CU Pet Spending: $905.56, +6.6%; Total $: $21.94B, ↑$0.99B (+4.7%) from…
    • Food ↑$1.86B       Supplies ↑$0.18B       Services ↑$0.46B       Vet ↓$1.51B
    • 80% are still younger Baby Boomers and they are very reactive. They were the drivers behind the 2020 binge and 2021 drop in Pet Food. Except for a big rollback in Veterinary their spending returned to a more normal pattern. 1.3% fewer CUs spent 3.0% less $, but 9.3% more often and they returned to the top in Total Pet $.
  • 65-74 – (16.2% of U.S. CUs); CU Pet Spending: $765.42, +7.6%; Total $: $16.44B, ↑$1.30B (+8.6%) from…
    • Food ↑$0.51B       Supplies ↑$0.09B       Services ↑$0.83B       Vet ↓$0.14B
    • This group is growing and are all Baby Boomers. They are careful with their money, but their commitment to their pets is very apparent. They are the only group with a spending increase every year from 2020>2022. In 2022 they increased spending in all but Veterinary as 1.2% more CUs spent 5.3% more $, 1.9% more often
  • 75> – (11.4% of U.S. CUs); CU Pet Spending: $429.29, -14.9%; Total $: $6.45B, ↓$0.84B (-11.5%) from…
    • Food ↓$1.53B       Supplies ↑$0.21B       Services ↑$0.30B       Vet ↑$0.18B
    • Pet parenting is more difficult, and money is tight for these oldest Pet Parents, but their commitment is still there. In 2021 they had increases in all segments. In 2022, only Food spending fell, and the drop was substantial. In response to skyrocketing inflation many CUs may have even downgraded their Pet Food. 4.9% more CUs spent 11.4% less $, 4.9% less often.

Age Group Recap: In 2022 Total Pet Spending definitely skewed away from the younger groups to the older 45>74 groups.  However, it was still driven by the 3 highest income groups from 35 to 64.

Next, we’ll take a look at some other key demographic “movers” in 2022 Total Pet Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2021. The red outline stayed the same.

In 2022, 69 of 96 Demographic Segments (72%) spent more on their Pets, a big drop from 83% in 2021. Although they were different, both years had 1 category where all segments spent more. However, there was less turmoil in 2022 as 3 segments held their spot and only 10 of the 24 segments flipped from 1st to last or vice versa. In 2021 there were 16 flips. In 2022 the flips were evenly divided between 1st and last. Last year most were to last because of big drops in Food $ from the 2020 binge. In 2022 most of the biggest lifts weren’t significantly larger than the biggest drops, an indication of more balanced spending. We should also note the stability in the Area category. Both the winner and loser held their position and Rural “lost” with an $0.81B increase, less than 20% below the winner. As noted earlier, both 2021 & 2022 had 1 category in which all segments spent more – In 2022 it was Area Type; In 2021 it was # of Earners.

Let’s look at some specifics.

7 of the winners are often on Top and all of them have higher incomes.

  • 45>54    • Mgrs & Prof.    • Married, Child 18>    • $100>149K    • Suburbs 2500>    • White, Not Hisp.    • Midwest

3 winners are surprising:

  • < College Grads    • Gen Z     • Homeowners w/o Mtge

Among the losers, 5 often find themselves in this position:

  • Retirees    • No Earner, 2+ CUs     •Hispanics     •Born <1946     •Renters

All of the “usual” losers have low incomes. There were 4 surprises:

  • College Grads     • West     • 35>44 yr-olds     • <2500 Population, aka “Rural” (despite a $0.8B spending increase)

All but Rural have a high income. However, Rural is a big Pet spender, with over $1000 in annual CU pet spending.

Recap: After a slight downturn in 2019, Pet Spending turned up in 2020, primarily due to the pandemic binge buying of Pet Food in the 1st half of the year. The Food binge ended in 2021 and Food $ fell as Pets “ate up” the overstock. However, it was replaced by binges in the other segments. Pet Parents caught up with all the Supplies purchases that they had postponed due to the pandemic and spending grew by 57%. COVID also caused them to focus on the health of their Pet Children so Veterinary also had a record increase. Services were hit hard by pandemic restrictions and closures, but they came back strong, $ were up 32%. Together, this produced a record $16.23B increase in Pet Spending. 2022 brought a new challenge – radically high inflation. Supplies and Veterinary had drops in spending as their 2021 binge couldn’t be repeated. Food spending bounced back with a 12.5% increase. However, the $4.29B Food lift didn’t make up for the combined $4.81B drop in Veterinary & Supplies. Without the record $3.26B increase in Services, Pet spending would have been down -$0.53B in 2022. This mixture produced a small $2.73B (+2.7%) lift in 2022. However, if you consider 8.9% Petflation in 2022, the amount of Pet Products & Services sold in 2022 was really down 5.7%. Spending skewed towards older groups but became more balanced among the 3 groups with the highest incomes. The 50/50 spending divide moved up a little in Total Pet. However, the impact of inflation was largely hidden. Petflation started slowing in July 23, but in September the 2023 YTD rate was still +9.1% vs 2022 and +17.9% vs 2021. We’ll see what happens.

2022 U.S. VETERINARY SERVICES SPENDING $29.71B…Down ↓$2.95B

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Veterinary Services is the 2nd largest segment in the Pet Industry. For years, high inflation has been a problem in the segment. Spending grew 24.0% from 2014>2019. Prices rose 17.4%, an avg of 3.3%. This caused a reduction of visit frequency and only 28% of the growth was “real” (avg real growth: +1.3%). In late 2020 & 2021, COVID focused Pet Parents on their “children’s” needs, including Veterinary Services. In 2021 Veterinary Spending reached $32.76 with 87% “real” growth. In 2022 the binge was not repeated so spending dropped to $29.71B, down $2.95B (-9.0%). Inflation was also high in 2022, 8.8%. In this report, we’ll take a closer look at the demographics behind the 2022 numbers. Note: All 2022 numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Interview Survey, rather than their Diary report. The low frequency of Veterinary Visits is still generating an extremely high variation in Diary data. Interview is a more logical and accurate way to track Veterinary Services Expenditures.

Let’s get started. Veterinary Spending per CU in 2022 was $221.60 down 9.4% from $244.51 in 2021. (Note: A 2022 Pet CU (68%) Spent $325.88. More specifically, the decrease in Veterinary spending came as a result of:

  • 0.4% more CU’s
  • Spending 7.7% less $
  • …1.8% less often

We’ll take a closer look. But first, the chart below gives an overview of recent Veterinary Spending.

The big drop in the first half of 2015 was tied to the upgrade to Super Premium Foods – Trading $. Then consumers began value shopping for Food and the savings freed up $ for Veterinary Services. Spending began to climb until it flattened out at the beginning of 2017. Inflation slowed in the 2nd half and spending took off. In 2018 prices turned up and consumers held their ground through 2019. The initial COVID reaction in 2020 was a drop in spending but “need focused” consumers then drove a huge increase through 2021. In 2022, inflation grew to 8.8% and spending slowed.

Now, let’s look at Veterinary spending by some specific demographics. First, here is a chart by Income Group

Veterinary Spending is still strongly driven by income. All groups spent less in 2022 with the biggest drop coming in the $70K> group. This is not unexpected as they drove the “binge” lift in 2021. The $100>150K group had the smallest decrease. However, the 50/50 spending break point in $ still grew slightly from $113K in 2021 to $115K in 2022.

National: $221.60 per CU (-9.4%) – $29.71B – Down $2.95B (-9.0%)

  • Over $150K (17.7% of CUs) – $428.31/CU (-19.8%) $10.15B, Down $1.11B (-9.9%) This highest income group is the biggest Veterinary Spender as 17.7% of CUs generated 34.1% of 2022 $ but also 37.6% of the decrease from 2021.
  • $100>150K (15.5% of CUs) – $326.23/CU (-9.6%) $6.78B, Down $0.06B (-0.9%) Spending by this middle/upper income group slowed in 2019 but took off in 20>21 as they filled their pets’ needs. In 2022, their spending stabilized.
  • $70K>100K (14.1% of CUs) – $202.95/CU (-24.3%) $3.84B, Down $1.47B (-27.7%) Steady growth 2016>19. Then $ fell in 2020 due to monetary pressures. 2021 had a big lift. High inflation was likely a factor in their big 2022 drop.
  • $30K>70K (28.9% of CUs) – $151.44/CU (-0.6%) $5.87B, Down $0.17B (-2.8%) From 2016 to 2020 their pattern was remarkably similar to the big spending $150K+ group. That changed in 2021 as they were the only group to spend less in Vet $ while $150K> had the biggest lift. In 2022 their $ continued to drop but the decrease was only -2.8%.
  • Under $30K (23.8% of CUs) $96.37/CU (+2.5%) $3.08B, Down $0.13B (-4.1%) This group is very price sensitive. After the big spending dip in 2018, they have slowly but consistently increased Veterinary spending until the small drop in 2022. They are 20% ahead of their 2017 Veterinary $, but considering inflation, they actually bought 5% less.

Now, here is Veterinary Spending by Age Group

Only 45>54 & 75> spent more. 55>64 & 35>44 had the biggest drops, about -$1.5B. In 2021 they had the biggest lifts.

National: $221.60 per CU (-9.4%) – $29.71B – Down $2.95B (-9.0%)

  • <25 (4.7% of CUs) – $60.30/CU (-5.6%) -$0.38B – Down $0.04B (-10.4%) Many combined into group CUs and some got married so 5.1% less CUs spent 7.8% more $ …12.5% less often.
  • 25>34 (15.6% of CUs) – $200.84/CU (-15.5%) – $4.20B – ↓ $0.80B (-16.0%) The commitment of these Millennials to their pets is growing. After being stable from 2017>19, the pandemic caused Veterinary spending to take off In 2020 & 2021. A 2022 drop was not unexpected as 0.6% less CUs spent 7.5% less $ …8.7% less often.
  • 35>44 (17.0% of CUs) – $223.94/CU (-21.7%) – $5.11B – ↓ $1.45B (-22.1%) In 2019, they radically increased their spending and briefly became #1 in Veterinary $. In 2020, unlike most groups, spending decreased. In 2021 they had the biggest % increase. In 2022 their spending fell $1.44B as 0.5% less CUs spent 6.0% less $ …16.7% less often.
  • 45>54 (16.9% of CUs) – $303.96/CU (+11.2%) – $6.90B – Up $0.80B (+13.2%) This group has the highest income, but value is important. In 2017, the slowed inflation caused them to spend significantly more money. In 2018, prices turned up and continued to inflate in 2019. Spending dropped precipitously to their 2016 level and they lost the top spot in Veterinary $. 2020 brought a big spending lift which continued into 2021 and 2022 despite high inflation. They moved back to the top in Veterinary spending as 1.8% more CUs spent 6.5% more $…4.4% more often
  • 55>64 (18.2% of CUs) – $251.46/CU (-18.7%) – $6.14B – ↓ $1.51B (-19.7%) This group was the leader in Veterinary Spending prior to 2015. In 2015 they upgraded to Super Premium Food and Vet Spending fell. In 2016 inflation slowed and they regained the top spot. In 2018 Veterinary prices began to strongly inflate again. Their spending fell and continued down into 2019. In 2020 they moved back to the top in Veterinary Spending. They stayed there with the biggest lift in 2021. In 2022 their spending binge ended and inflation soared to 8.8% so 1.3% fewer CUs spent 21.0% less $ …2.9% more often. They had the biggest drop in $, -$1.51B and fell to 2nd place in Veterinary spending.
  • 65>74 (16.2% of CUs) – $216.86/CU (-3.9%) – $4.71B – ↓ $0.14B (-2.8%) This group is growing and is all Boomers, so they are committed to their pets. They had consistent annual growth from 2018>2021. In 2022 1.2% more CUs spent 8.9% less $ …5.4% more often. Inflation was likely a factor in their small decrease.
  • 75> (11.4% of CUs) – $149.35/CU (+3.5%) – $2.28B – Up $0.18B (+8.6%) This group of oldest Pet Parents has a strong commitment to their pets. In 2015, they had a $1B increase in Veterinary Spending. In 2016 & 2017, they focused on Food, Supplies and Services. In 2018, they turned their attention back to Veterinary. However, their spending has slowly but consistently grown every year since 2015 – the only group to accomplish this. In 2022 4.9% more CUs spent 7.2% less $ …11.5% more often. This produced an 8.6% increase in spending.

Now, let’s take a look at some other key demographic “movers” behind the 2022 Veterinary Spending numbers.

Veterinary spending fell by $2.95B (-9.0%) in 2022. With a high 8.8% inflation rate, the real drop in the amount of services bought was -16.4%. 74 of 96 demographic segments (77.1%) spent less on Veterinary Services, a big change from 2021 when 93.4% of segments spent more. There was a lot of turmoil as 14 of 24 flipped from first to last or vice versa while only 3 segments maintained their position from 2021. 8 of the flips were from 1st to last. We should also note that in 2021 there were 9 categories in which all segments spent more. In 2022 in 3 categories, all spent less.

Only 4 of the “winners” are often found at the top:

    ∙ 45>54 yr olds   ∙ Gen X   ∙ $200K   ∙ Homeowners w/Mtg (had the smallest decrease)

The biggest surprises are:

   ∙ Blue Collar   ∙ HS Grad or Less   ∙ African American   ∙ No Earner, Single   ∙ Center City (had the smallest decrease)

Both groups have one characteristic in common – Income. The usual winners have the highest income in their demographic category and the surprises are all at or near the bottom in income for their category.

In the “losers” group, there are only 2 that are often on the bottom – Renters and Unmarried, 2+ Adult CUs. 8 of the 12 flipped from 1st in 2021 to last in 2022 but all have 1 thing in common. They all binge spent on Veterinary Services in 2021. Since binges usually aren’t repeated, it’s not surprising that they had big decreases in 2022.

Overall, the $2.95B drop in $ was just 37.7% of the $7.82B lift in 2022 – a net gain of $4.87B in 2 years (+19.6%). Considering inflation, 87% of the 20>21 growth was real but only 31.5% of the 20>22 growth. There was only a 6.2% increase in the amount of Veterinary Services bought from 2020 to 2022. High inflation is a problem.

The 2022 decrease was widespread across Income and Age groups as all income groups spent less and only 2 age groups spent more. The drop was also widespread beyond Age and Income. 77% of all segments spent less including 3 categories – Housing, Area and CU Size, where all segments had decreased Veterinary Services spending.

Prior to 2020 there was a strong youth movement in Veterinary Spending from the <45 crowd. That changed in 2020 as the 45> groups accounted for 94% of the $3B increase. In 2020 & 2021 the 55>64 yr-olds were on top , followed by the highest income 45>54 yr-olds in 2022. The $ are skewing older but have also become more balanced from 25>74. Although Veterinary services are needed by all Pet Parents, higher income is still the biggest driver in spending. This is best illustrated by comparing segment performance (Share of $/Share of CUs): <$30K: 50.6%; $30>69K: 68.3%; $70K>99K: 91.6%; $100>149K: 147.2%; $150>199K: 151.2%; $200K>: 225.3%. Yes, Vet Services are needed by all, but are becoming less affordable for many.