Retail Channel $ Update – February Monthly & March Advance

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In March, Commodities inflation vs last year rose from 0.3% in February to 0.6%. Although down from its peak, cumulative inflation still impacts consumer spending. The YOY sales increase for March is 36% below average for Relevant Retail and for all but 2 channels. Prices are now deflating in a number of channels but still high vs 21 which slows growth in the amount of product sold. There is still a long road to recovery, so we’ll continue to track the retail market with data from 2 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 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 Monthly reports. The biggest difference is that the full sample in the Monthly report allows us to “drill” a little deeper into the retail channels.

We will begin with the February Monthly Report and then go to the March Advance Report. Our focus is comparing to last year but also 2021 & 2019. We’ll show both actual and the “real” change in sales 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 is more detailed in the Monthly 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 last year and vs 2021.
    • Current Month Real change vs last year and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for this year vs last year, 2021 & 2019.
    • Current Ytd Real change % for this year vs last year and vs 2021 and 2019
  • Monthly & Ytd $ & CPIs for this year vs last year and vs 2021 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First the February Monthly. All but Relevant Retail were up from January and all but Gas Stations were up vs 23, 21 & 19. Considering inflation, Gas Stations had the only drop vs 23 or 21. There were 4 in Dec & Jan. Gas Stations are still really down vs 2019 but for the 4th straight month, Relevant Retail is “really” up vs all years. ($ are Not Seasonally Adjusted)

The February Monthly is $4.1B more than the Advance report. Restaurants: +$0.1B; Auto: +$1.9B; Gas Stations: +$0.4B; Relevant Retail: +$1.6B. Surprisingly, $ were up vs January for all but Relevant Retail. Actual sales for all but Gas Stations were positive in all measurements vs 23, 21 & 19. Gas prices fell but Gas Stations sales were down vs 23. There were only 2 “real” sales drops – both from Gas Stations. All measurements (actual & real) vs 23, 21 & 19 were positive for Auto, Restaurants, Total & Relevant Retail. Restaurants have the biggest increases vs 21 & 19 but Relevant Retail is still the top “real” performer vs 2019. However, only 54% of their growth is real.

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

Overall– 8 of 11 were up from January. vs Feb 23, 8 were actually and 9 “really” up. Vs Feb 21, All were up and 8 were real increases. Vs 2019, Off/Gift/Souv were actually & really down. All others were up in both measurements.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 32.3% since 2019. Prices for the Bldg/Matl group have inflated 19.7% since 2021 which is having an impact. Both HomeCtr/Hdwe and Farm stores are only actually up vs 21 & 19. Deflation pushed Home Ctr/Hdwe really positive vs Feb 23 and they are again really up vs 19. Other real measurements vs 23 & 21 are negative for both and only 25% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.5%, Real: 1.3%; Farm: 7.2%, Real: 3.0%
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. The inflation situation has flipped as the Grocery rate is now 66% lower than Drug/Med products. Both are down from January in $. Drug Stores are positive in all other measurements and 67% of their 2019>24 growth is real. All actual $ are up for Supermarkets and inflation is slowing but their 24 real sales are still down vs 21. Only 14% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.7%, Real: +0.9%; Drug Stores: +4.9%, Real: +3.4%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 1.5% from January and their only negative is real Ytd vs 21. Prices are still deflating, -1.8% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.1% in 21>22. The result is that 65.2% of their 49.4% lift since 2019 is real. Their Avg 19>24 Growth Rate is: +8.4%; Real: +5.7%.
  • Gen Mdse Stores – All were up vs January. Actual sales vs 21 & 19 were up for all. In fact, the only negatives came from Discount Department Stores. They were actually down Ytd vs 23 and really down Ytd vs 23 & 21. They are again really positive vs 19 but only 21% of their growth is real. The other channels average 47% in real growth. Avg 19>24 Growth: SupCtr/Club: 5.9%, Real: 2.7%; $/Value Strs: +6.8%, Real: +3.6%; Disc. Dept. Strs: +2.6%, Real: +0.6%
  • Office, Gift & Souvenir Stores – Actual sales are up slightly, +0.4% from January but they are negative in all actual measurements but vs 21. Their real sales numbers are all negative but vs February 21. This includes negatives vs 2019. Their recovery started late, and their slow progress has been stalled since June 23. Avg Growth Rate: -0.9%, Real: -2.8%
  • Internet/Mail Order – $ are down -4.7% from January but set a new monthly record of $100.3B. All measurements are positive, but their growth is only 68.2% of their average since 2019. However, 82.9% of their 121.9% growth since 2019 is real. Avg Growth: +17.3%, Real: +15.0%. 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, rose in Sep>Nov, fell in Dec>Jan, then grew in Feb. All measurements vs 23, 21 & 19 are positive. They are in 2nd place, behind the Internet, in the % increase vs 19 but the leader vs 21. Also, 78% of their 73.8% growth since 2019 is real. Average 19>24 Growth: +11.7%, Real: +9.5%.

February was a big, positive surprise. It is usually the retail low point of the year but not in 24. Sales in 8 channels were up vs January and vs February 23. Prices are now deflating in a number of channels so 9 channels were really up vs 23. Cumulative inflation is still a factor. Sales increases are lower and 6 of 11 channels were really down Ytd vs 21 but slow improvement continues. The commodities CPI increased slightly in March. Let’s look for any impact on Retail $ales.

March sales vs February grew for all big groups – no surprise. Except for 2020, a Feb>Mar Total Retail lift has happened every year since 1992. However, the 10.1% lift is 27% below the average of 13.7%. All actual $ measurements are positive vs 23, 21 & 19 for all groups but Gas Stations vs 22 and Auto vs Mar 23 & 21. Only Restaurants have an above average lift vs March 23. Auto & Gas $ are down while Total & Relevant Retail are 36+% below average. Inflation is still a big factor. The rate for all commodities, the best pricing measure for Retail, grew from 0.3% to 0.6% and is 16.6% vs 21. There is some “real” bad news. In February only 1 measurement was “really” down vs 23 & 21 and it came from Gas Stations. In March, 7 were really down – 3 from Gas Stations. Relevant Retail’s real monthly sales vs last year have now been positive for 9 straight months, but after 4 straight months of all positives, their real sales vs March 21 are down.

Overall – Inflation Reality – For Total Retail, inflation grew and real sales vs March 21 turned negative. For Restaurants, inflation remains high, +4.1% but they are really positive vs 23 & 21. Gas prices rose and that group is still in turmoil. Auto prices are down but still up 18.6% vs 21 which has slowed actual & real sales. Prices are slightly deflating for Relevant Retail but their real sales are now down vs March 21, after 4 months of all positives. Their progress is slowing.

Total Retail – Since June 20, every month but April 23 has set a monthly sales record. In 2023 Sales were on a roller coaster. Up in Jul>Aug, down in Sept, up in Oct>Dec, down in Jan 24, surprisingly up in Feb and again in March. Inflation grew but is only 0.6%. YOY sales growth is still low. Sales are up 3.3% Ytd vs last year, but this is only 46% of their avg 19>24 growth. Real sales vs Mar 21 turned negative and only 41% of the 19>24 growth is real. YOY inflation in Total Retail has significantly slowed but we see its cumulative impact. Growth: 23>24: 3.3%; Avg 19>24: +7.2%, Real: +3.3%.

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 $96B in December 23 and exceeding $1T for the 1st time. They have the biggest increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 4.1% from 4.5% last month but is still +20.8% vs 21 and +25.8% vs 19. 39.5% of their 51.2% growth since 19 is real and they remain 3rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.6%; Avg 19>24:+8.6%, Real: +3.7%. They just account for 13.5% 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 Y/E real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 was a true rollercoaster but the $ set a new record, $1.595T. $ fell in Jan 24 but grew in Feb>Mar. However, actual & real $ vs Mar 23 & 21 are negative plus real Ytd vs 21. Prices vs 23 are -0.8%. Only 23% of 19>24 growth is real. Growth: 2.1%; Avg 19>24: +6.0%, Real: +1.5%.

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, then strongly fell in Mar>Jul to -20.2%. In August they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb. In Mar they are +1.0%. Pricing is a big factor in the $ drop vs 23 but real $ vs Mar 21 & Ytd vs 21 & 19 are also negative. Growth: -3.0%; Avg 19>24: +5.4%, Real: -1.0%. They 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, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in Jan>Feb 24 but rose in March, which is normal. However, the 9.5% lift is 24% below the 92>23 avg and the YOY lift of 3.1% is down 36% from avg. Also, real sales vs Mar 21 turned negative after 4 straight months of all positives. However, 54% of their 44.2% 19>24 growth is real – #1 in performance. Growth: 3.8%; Avg 19>24: +7.6%, Real: +4.3%. This is where America shops. They finished 2023 and started up 2024 strong but in March their recovery appears to be slowing. This is concerning.

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, which is very evident in March. It is also significant that the number of real drops vs 23 & 21 increased to 7 from 1 in February. Restaurants are still doing well, but the Auto group has now joined Gas Stations in turmoil. Although not as visible, the biggest concern is with Relevant Retail. Sales increases are markedly lower and real sales vs Mar 21 turned negative after 4 months of all positives. Consumers are still spending more $ and generally buying more product, but progress has definitely slowed.

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

  • Relevant Retail: Growth: 3.8%; Avg: +7.6%, Real: +4.3%. All were up from Feb. Vs Mar 23: 5 were up, Real: 7. Vs Mar 21: 6 were up, Real: 4. Vs 19: All were actually up. Only Dept Stores & Furnishing stores were really down.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are up 11.8% from February. Their actual $ are only up Ytd vs 21 & 19. Their real numbers are only up vs Mar 23, +0.8%. They are even really down vs 2019. Growth: -1.4%; Avg 19>24: +0.4%, Real: -1.6%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +13.2% from February. In fact, both actual and real sales are positive in all measurements. However, only 44% of their 33.9% 19>24 lift is real – inflation’s impact. Note: Growth exceeds Avg. Growth: 6.1%; Avg: +6.0%, Real: +2.8%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are +8.3% from February and up monthly and Ytd vs 22, 21 & 19. However, inflation hit them hard. Real $ are down vs 21 and only 14% of the growth since 2019 is real. Growth: 2.8%; Avg 19>24: +5.7%, Real: +0.9%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are +5.4% from Feb. Actual $ are down vs Mar 23 and real $ are down vs Mar 23 & 21. Inflation has been low so 66% of their 27% growth from 2019 is real. Note: Their growth is now below the 19>24 avg. Growth: 3.6%; Avg 19>24: +4.9%, Real: +3.3%
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are up 15.4% from February and positive in all comparisons, actual & real vs 22, 21 & 19 except real sales vs Mar 21. Plus, 70% of their 19>24 growth is real. Growth: 3.4%; Avg 19>24: +3.8%, Real:+2.7%
  • 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 +10.2% from January but negative in all other measurements but actual Ytd sales vs 2019. They have sold less product in 2024 than 2019. Growth: -8.4%; Avg 19>24: +2.3%, Real: -0.5%
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are up only 3.2% from February. This small lift caused actual $ vs Mar 23 & 21 to turn negative. Other measurements are positive. Note: Their growth again exceeds the average. Growth: 1.3%; Avg 19>24: +0.6%, Real: +3.3%.
  • 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. Prices are still deflating, and sales are up 14.6% from February but they are only positive vs 2019. Prices may be deflating but they are still high, 18.8% above 21. Real sales are negative for all but Ytd vs 21 & 19. Also, just 24% of their 19>24 sales growth is real. Growth: -5.1%; Avg 19>24: +5.6%, Real: +1.5%.
  • 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 sales are +14.4% from February but down for all but Ytd vs 2019. The only positive real sales measurements are Ytd vs 23 & 19. Their inflation rate has been lower than most groups so 73% of their 29.3% growth since 2019 is real. Growth: -1.5%; Avg 19>24: +5.3%, Real: +3.9%.
  • 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 +10.9% vs February and are again positive in all measurements – both actual & real. They are still 2nd to NonStore outlets in the percentage increase vs 19 and vs 21. 73% of their 53.6% 19>24 growth is real. Growth: 4.6%; Avg 19>24: +9.0%, Real: 6.8%.
  • NonStore Retailers – 90% of their $ 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. $ales are +6.4% from February. Their YOY growth fell to +5.6% in Mar 24, 44% below average, but they are positive in all measurements. 81% of their 106.5% 2019>24 growth is real. Growth: 8.7%; Avg: +15.6%, Real: +13.3%

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 June 22 peak, which has helped the Retail Situation. As expected, Sales grew from February. However, the lift was below average for most channels. The YOY monthly increase is also slowing. The Relevant Retail lift vs Mar 23 was 36% below its average 4.9% increase and 6 of 11 channels actually had a decrease. Among the 5 with increases, only SupCtr/$ Stores had a double-digit lift over 23. Inflation is low and now slightly deflating in most channels. However, we are still seeing the impact of high cumulative inflation. Only a few channels are doing well. The slowing of the  YOY sales increase has become the biggest problem. In March, only SupCtr/Club/$ & Electronics had a Ytd lift above their 19>24 Avg, down from 3 in February, which was still bad. Relevant Retail is now really down Ytd vs 21, after 4 straight months of all positives. The recovery has definitely slowed.

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 since 2021 to show cumulative inflation.

Monthly YOY 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 2024 – March Update: Turns up to +3.8% vs 2023

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The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec 23, but turned up again in Jan>Mar 24. The CPI increased in March to +3.5% from +3.2% in February. Grocery prices fell -0.01% from February, but inflation rose to 1.2% from 1.0% due to a -0.2% price drop in 23. However, after 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 13 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. At 3.8% in March, it is still 9% above the national rate, but down from +52% in January. We will look deeper into the numbers. The 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 24 vs 23 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (22>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2024 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2024
  • 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 March 22 to March 24. 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 segment patterns and compare them to the overall U.S. CPI. The year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In March, Pet prices were up 1.0% from February. All but Supplies were up, with Veterinary leading the way, +2.5%.

In Mar 22, the CPI was +11.9% and Pet prices were +9.2%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. 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. In Nov, all but Food & Vet fell. In Dec, Supplies & Vet  drove prices up. In Jan>Mar 24 Pet prices grew despite a few drops by all but Services. Total Pet, Vet & Services are at their pricing peak.

  • 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, dipped in Oct>Dec, then rose Jan>Mar 24, but 32% of the 21.5% increase in the 51 months since Dec 2019 happened in the 6 months from Jan>Jun 2022 – 12% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. In Jun>Aug they dipped, grew Sep>Nov, fell Dec>Feb, then rose in Mar. 94% of the 22.7% lift came in 22 & 23.
  • Pet Supplies – Supplies prices were high in Dec 19 due to tariffs. They then had a “deflated” roller coaster ride until mid-21 when they returned to Dec 19 prices and essentially stayed there until 22. They turned up in Jan 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 grew in Jan>Feb 23. They fell in Mar, but set a new record in May, then continued the rollercoaster ride with a drop in March, after Dec>Jan lifts.
  • 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 prices got on a rollercoaster in Mar>Jun. They turned up Jul 22>Mar 23 but the increase slowed in April and prices fell in May. They rose again Jun>Aug, fell in Sep>Dec, then spiked in Jan>Mar.
  • Veterinary – Inflation has been consistent. Prices turned up in Mar 20 and grew through 21. A surge began in Dec 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, grew Sep>Dec, fell in Jan 24, but set records in Feb/Mar.
  • Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in Nov. In December prices turned up and grew through March to a new record high. Prices are at record highs for Total Pet and the Service segments and Petflation has been above the National CPI since Nov 22.

Next, we’ll turn our attention to the Year Over Year inflation rate change for March and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation grew to 3.8%, up from 3.5% in February. It is still only 9% higher than the National rate. In January, it was +52%. The chart will allow you to compare the inflation rates of 23>24 to 22>23 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. We’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.6% from February but were +3.5% vs March 23, up from +3.2% last month. Grocery inflation also grew slightly to +1.2% from +1.0%. 2 of 9 categories had a price decrease from last month – Pet Supplies & Groceries. There were also 2 in January & February, but none were repeats. The national YOY monthly CPI rate of 3.5% is up but still just 70% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Veterinary & Medical Services. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 2 segments – Medical Services & Haircuts – both Services categories. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 99% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.3% while the CPI for Commodities is +0.6%. This clearly shows that Services are driving most of the current 3.5% inflation.

  • U.S. CPI– Prices are +0.6% from January. The YOY increase is 3.5%, up from 3.2%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 75% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 of 4 with lifts – not good news! The current rate is 30% below 22>23 but the 21>24 rate is still 17.9%. That is 78.2% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are +0.8% vs February and +1.8% vs March 23, down from 2.6%. However, they are still 1.5 times the Food at Home inflation rate. The YOY increase of 1.8% is being measured against a time when prices were 20.3% above the 2019 level and the current increase is now below the pre-pandemic 2.1% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 93.6% of the total 24.9% inflation since 2019.
  • Food at Home – Prices are down -0.01% from February, but the monthly YOY increase is 1.2%, up from 1.0% last month. It is still radically lower than Jul>Sep 2022 when it exceeded 13%. The 25.9% Inflation for this category since 2019 is 13% more than the national CPI and is in 3rd place behind Vet & Pet Services. 79.5% of the inflation since 2019 occurred from 2021>24. This mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>21 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 down -0.4% from February but up 0.9% vs March 2023. They have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 months of increases pushed them to a new record high in Feb 23. Prices fell in March, bounced back in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again in Dec>Feb, then fell in March.
  • Veterinary Services– Prices are +2.5% from February and are +9.6% from 2023, a March record and the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +39.0% and since 2021, +28.7%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 73.6% of the cumulative inflation since 2019 occurred from 2021>24.
  • 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 6% from February, and they are +2.1% vs last year. Medical Services are not a big part of the current surge as only 41% of the 15.1% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices have surged, +0.3% from February and +4.8% vs last year. However, inflation is still well below the +8.0% back in March 23. Now, 68% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. BTW: They have the 2nd highest 19>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.1% from February and +3.8% from 23. 4 of the last 5 months have been <4.0%. Inflation has been rather consistent as 57% of the inflation from 19>24 happened in 60% of the time.
  • Total Pet– Petflation is 60% lower than the 22>23 rate and again only 9% higher than the U.S. CPI. For March, 3.8% is still the 5th highest rate since 1997. Vs February, prices grew +1.0% as all but Supplies had lifts, especially Vet at +2.5%. A Feb>Mar price increase has happened in 23 of the last 27 years, with an average lift of 0.3%. So, it was no surprise but 3 times stronger than average. In terms of Petflation, 2024 has returned to a more normal pattern with the 2 Service segments leading the way.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – 3 Pet – Pet Food, Services & Total Pet, plus Groceries. The 23>24 rate is much lower for all but Veterinary, where it actually has the highest rate of any year. 21>22 still has the highest rate for the National CPI & Pet Supplies. The average annual national inflation in the 5 years since 2019  is 4.2%. Only 2 of the categories are below that rate – Medical Services (2.8%) and Pet Supplies (2.3%). It comes as no surprise that Veterinary Services has the highest average rate (6.5%), but all 5 other categories are +4.6% or higher.

  • U.S. CPI – The 23>24 rate is 3.2%, up from 3.1% February, but down 45% from 22>23 and 60% less than 21>22. It is also 24% below the average YOY increase from 2019>2024, but it’s still 71% more than the average annual increase from 2018>2021. 79% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 3.0%, down from 3.7% in February and 80% less than the 22>23 rate. Now, it is also 27% lower than 21>22 but 50% above the average rate from 2018>2020. Pet Food has the highest 22>23 rate on the chart and remains in 2nd place in the 21>24 rates. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022 and especially in 2023. 92% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down 89% from 22>23, 87% from 21>22 and even 69% from 20>21. However, it is still 10% higher than the average rate from 2018>20. It is also down to a tie for 3rd for the highest inflation since 2019 but still beat the U.S. CPI by 15%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased in Jan & Feb, then fell in March but the 2024 inflation rate of 0.7% is only higher than the -3.2% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were ≈6.2% in 22 & 23. The 2021 deflation created a unique situation. Prices are up 12.1% from 2019 but 114% of this increase happened from 2021>24. Prices are up 13.8% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. It seemed to peak in 2023, but has now grown even stronger at the start of 2024. On the chart they are #1 in inflation since 2019 and since 2021. At +6.5%, they have the highest average annual inflation rate since 2019. It is 1.5 times higher than the National Average but 2.3 times higher than the Inflation average for Medical Services. 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. Ytd it is 1.3%. Except for 19>20, it has been between 2.1>2.9%. We are still seeing the impact of 2023 when prices actually deflated (-0.3%). This was the only deflationary year since the US BLS began tracking this category in 1935.
  • Pet Services – After falling in late 2023, prices have surged in 2024. The Ytd 23>24 inflation rate of 4.9% is 2nd to Veterinary in the Pet Industry. It is 39% less than 22>23 and 14% below 21>22. However, it is still 1.6 times higher than the 2018>21 average rate. Pet Services is 2nd in 19>24 inflation but only 5th in inflation since 2021.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 3.9%, which is 32% below the 20>21 peak but still 20% above the 18>20 average. Consumers are paying 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 4.0%, down from 4.1%. It is 61% less than 22>23 but 76% higher than the 2018>21 average rate. It is also still 1.25 times the national CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food inflation rates. Supplies inflation was stable monthly & YTD. Services inflation fell slightly despite prices reaching a new record high. Veterinary hit record monthly & YTD rates but it was not enough to overcome the drops.

Petflation is slowing, but it is still strong, with the 5th highest rate for March in history. It is also still higher than the National CPI. Back In 2021 it was only half of that rate. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 22.1% above 2021 and 26.6% higher than 2019. Those are big lifts. In fact, in March prices for Total Pet & the Service segments are the highest in history. Food prices are only 0.5% below their peak and Supplies prices are only down 0.4%. Only Supplies prices (+12.2%) are less than 24.9% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Non-Vet Services will be the least impacted as it is driven by high income CUs. Veterinary will likely see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies will likely see a reduction in purchase frequency and some Pet Parents may even downgrade their Pet Food. Products will see a strong movement to online purchasing and private label. We saw direct evidence of this impact at GPE 24 where a record number of exhibitors offered OEM services. Strong inflation has a widespread impact.

Retail Sales – The Path from 2019 to 2023

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In this report we fill take a closer look at the Retail journey from 2019 to 2023. It was a traumatic time for America and the retail marketplace. We experienced a massive pandemic followed by the worst inflation in 40 years. Granted, much of the pricing surge was started by supply chain issues due to the pandemic. However, they were different problems with different solutions for recovery.

Our analysis will include an overview of annual retail sales from 2019 to 2023 followed by a more in depth look in which we factor inflation into the numbers. This gives us a “real” view of the situation as it shows the change in the amount of product sold. We will look at the Big Retail groups then drill deeper into the pet relevant channels. First, here is an overview of the Big 4 Groups and Total Retail.

You immediately see the impact of the 2020 pandemic as sales dropped in Restaurants, Auto and Gas Stations. The drops were especially large in Restaurants and Gas Stations due to closures and the “stay at home” attitude. Total Retail had an increase every year, even 2020. The 2020 lift was solely due to Relevant Retail. They are the only member of the Big 4 to have consistent annual growth. The only drop outside of 2020 was by Gas Stations. They had ridiculously high inflation. In 2023, it’s cumulative impact was very visible as their total $ dropped. Now, let’s look a little deeper. The next chart tracks the actual and real (inflation factored in) annual $ changes. We have included 2018>19 so that you can compare 19>23 to a pre-pandemic year.

The first thing that you notice is that there are a lot more negatives. There were 9 “real” annual sales drops added to the 4 actual drops. 36% of all real annual measurements were negative. Plus, the average real growth in Gas Stations is negative. Only 16% of actual annual sales measurements were negative. This clearly demonstrates the impact of inflation. Another result of inflation is very evident. All groups and Total Retail had a strong COVID recovery with their biggest lift occurring in 2021. Inflation peaked in 2022. You will note that the annual actual increases were progressively smaller in 2022 & 2023 – another immediate and cumulative impact of inflation.

Now let’s take a more detailed look at each of the big groups.

Total Retail – Thanks to Relevant Retail, they eked out a +0.9% increase in 2020. Commodity prices actually deflated -0.3% in 2020. Things changed in 2021. They had a strong 18.4% recovery as sales grew by $1.1T. However, strong inflation began, +7.8% so only 53% of the growth was real. The 21>22 increase slowed to 9.6% but Inflation grew to 10.9%. (Peak: June, 13.6%) The result was a -1.2% drop in real sales. Inflation slowed to 1.2% in 23 but the $ increase dropped to 3.2%, about the same as 18>19 but 59% below average. However, 60% was real.

Restaurants – They were hit hard by the pandemic as sales fell -15.7%. Inflation also slowed from 3% to 2%. Consumers returned to eating out in 2021. Sales increased 29.5%, despite the fact that inflation more than doubled to 4.4%. The increase slowed to 15.7% in 2022 as inflation peaked at 7.5%. In 2023, sales growth was still in double digits at 11.3% and inflation fell slightly to 7.0%. But you see clear evidence of its cumulative impact. In 21, 81% of their growth was real. In 23, it was down to 35%. Overall, 36% of their 40.6% 19>23 growth is real.

Auto – In 2019, prior to the pandemic, they had a small, 2.6% increase and inflation was only 0.7%. The pandemic brought a small, -2.3% drop in sales and inflation inched up to 1.6%. In 2021, sales took off, +22.8%, but so did inflation, 13.9% (the peak). Only 35% of the growth was real. In 22, inflation was 11.4%. Sales were only up 3.1% so real sales were down -7.5%. In 23, prices deflated -1.4% and sales grew by 4.2%. However, just 5% of their 28.9% growth since 2019 is real. Essentially, they are selling the same amount as 2019, but charging 27.1% more.

Gas Stations – Amazingly, prices deflated in 2019, -3.6%, but sales still fell -1.9% because consumers only bought 1.8% more gas. Sales plummeted -16.4% in 2020, despite a -16.3% drop in prices. People bought -0.2% less gas. Prices exploded in 21 & 22, with 30+% increases in both years. Sales also increased over 30% in both years, but consumers bought 1>2% less. In 23, prices fell -10.6%, but it didn’t help as sales fell -11.4%. People bought 1.0% less. In 2020, consumers began driving a lot less, but they radically increased the amount of home deliveries. We bought -4.7% less gas in 23 than in 19 but in every year, we bought 98>99% of the amount bought the previous year.

Relevant Retail (Total less Restaurants, Auto & Gas Stations) – 2018>19 growth was 3.5%, 97% was real because inflation was only 0.1%. In 2020 they had the only growth, +7.9%, which kept Total Retail positive. Inflation was 1.4% so 81% of the lift was real. In 21, they had a strong increase, but inflation doubled to 2.9%. However, 76% of the growth was still real. In 22, prices exploded to +8.1%. Sales still increased but the lift slowed to 7.9% and real sales turned slightly negative, -0.1%. In 23, inflation plunged to 3.2% but prices were still 16.4% above 2019. The sales increase  fell to 3.5%. This was the same as 18>19 but only 6% was real – cumulative inflation.

Recap– The situation is obviously complex. In 23, all groups had a 28+% increase from 2019 but when you consider inflation, the percentage of their increase that was real peaked at 48% for Relevant Retail. Gas Stations were even really down -4.7%. Relevant Retail has a number of channels, which took many different paths. Let’s look deeper.

Here is an overview of the most Pet Relevant Retail Channels

There is a lot of consistency. 7 of 11 channels had consistent annual growth so they peaked in 2023. Of the other 4 channels, Discount Department Stores & Office, Gift & Souvenir Stores had the same pattern – drops in 2020 & 2023 with sales peaking in 2022. Home Center/Hardware stores had consistent growth until sales dropped in 2023. Sporting Goods Stores peaked in 2021 then fell in 2022. They have essentially plateaued at their 2021 peak. All channels sold more in 2023 than in 2019. The biggest increases came from the Internet, +90.6%, A/O Misc. (includes Pet),+53.7%, and Farm Stores, +53.0%. Now, let’s look at the details.

Relevant Retail, 11 Channels – 19: 8 were actually & really up. 20: Inflation was still low, at 1.4% so the number really & actually up grew to 9; 21: The CPI grew by 2.9% but actual & real sales increased for all 11. 22: Prices grew by 8.1%. 10 had sales increases but only 4 were real and Relevant Retail sales were really down -0.1%. 23: 8 were up and 5 were real. However, the lifts were smaller. The lift, 3.5%, was equal to 2019 but the percentage of real growth fell from 97% to 6%.

Home Ctr/Hardware – 19: The CPI was low at 1.5% but sales fell -2.6%. 20 & 21: Sales took off, by about +13% in both years, even as the CPI grew from 1.8% to 3.5%. 22: Prices jumped up by 10.9%. $ still increased by 6.7% but real sales were -3.7%. 23: Prices grew 7.4% and sales fell -4.2%. Now, only 14% of their 31.1% 19>23 growth is real.

Farm/Garden – 19: Unlike Home Ctrs, they had a small lift, +2.6%. 20>23: The same pattern as Home Ctrs/Hdwe but their 20 & 21 lifts were 33+% larger. Their 22 & 23 lifts were not enough to overcome inflation so real sales fell -3.1% in 22 and -4.5% in 23. However, 42% of their 53% 19>23 growth was real – 3 times better than Home Ctrs.

Supermarkets – 19: Inflation was 0.9% and sales grew 3.4%. 20: The CPI was 3.5% but the $ took off, +10.1%. 21: Inflation stayed at 3.5% but the increase slowed to 3.8%, with only 0.3% real growth. 22: The CPI jumped by 11.4%. Sales were up 8.9% but really down -2.3%. 23: Inflation slowed to 5.0% but the $ increase was only 2.8% and real sales were down -2.2%. Only 8% of their 27.9% 19>23 growth is real.

Drug Stores – 19: The CPI was 0.0% and $ grew 1.7%. 20: The increase quadrupled to 7.0% and prices only grew by 0.5%. 21: Prices deflated -1.5% and sales were +6.6%. 22: The CPI grew to 2.9% and the $ increase slowed to 2.5% so real sales were -0.4%. 23: Inflation grew to 4.2% but $ had their biggest lift, +8.3%. Despite rising inflation, 73% of their 26.5% 19>23 growth is real.

Sporting Goods – 19: The CPI was 1.2% and sales grew 2.2%. 20: Inflation stayed at 1.2% but sales took off, +17.2%. 21: inflation increased over 5 times to 6.7% but the lift increased to 22.3% reaching their 19>23 sales peak. 22: Prices grew 5.2% and sales dropped -1.2%. 23: Prices fell -0.5% but sales only grew 0.1%. They have basically plateaued near the 2021 level but 61% of their 41.8% 19>23 growth is real.

Discount Dept Strs: 19: Prices deflated -0.1% but $ still fell -2.5%. 20: The CPI was only 0.3% but sales still dropped -4.3%. 21: Prices were up 2.4% but their sales recovered, +12.3%. 22: Inflation more than doubled to 5.7% and the $ lift slowed to 1.4%. Real sales were -4.1%. 23: The CPI fell to 2.2% but sales decreased by -1.4%. Their sales are up 7.6% from 2019 but their real sales are down -3.1%.

Clubs & SuperCenters: 19: The CPI was 0.1% and sales grew 2.9%. 20: CPI was 1.6%. Sales grew 5%. 21: CPI increased to 2.8% but sales increased by 8.4%, 5.5% real. 22: Inflation peaked at 7.8%. $ again grew by 8.4% but real growth fell to 0.5%. 23: The CPI slowed to 3.4% but the cumulative impact caused growth to slow to 3.0% and real growth turned negative at -0.4%. Only 34% of their 27.1% 19>23 growth was real.

$/Value Stores: 19: CPI = 0.1%. Also, a 2.9% sales increase. 20: CPI = 1.6%. Sales spiked at +13.0%. 21: CPI = 2.8%. $ growth slowed to 3.7%. Real growth only 0.9%. 22: CPI jumped up to 7.8%. Sales growth increased to 4.3% but real growth was negative, -3.2%. 23: CPI slowed to 3.4% and sales increased by 6.9% so real growth turned positive again at 3.4%. 40% of their 30.6% 19>23 growth was real, a little better than Clubs/SupCtrs.

Office/Gift/Souvenir – 19: CPI = -0.1%. Sales fell -2.1%. 20: CPI = 0.3%. Sales plummeted, -19.2%. 21: CPI = 2.4%, Sales had a strong recovery, +23.6%. 22: CPI jumped to 5.7% and growth slowed to 6.1%. 23: The CPI moved down to 2.2% but sales fell -3.6%. Although their actual sales are up 2.2% from 2019, they are really down -7.9%.

A/O Mscellaneous (22% Pet) – 19: CPI = -0.1% and sales grew 3.4%. 20: CPI = 0.3% and sales increased by 4.8%. 21: CPI increased to 2.4% but sales took off, +22.5%. 22: The CPI jumped to 5.7% and the lift slowed a little to 14.7% so now only 58% was real. 23: The CPI dropped to 2.2% but sales growth slowed to 4.4% and only 48% was real. Their overall 19>23 growth was 53.7% (2nd best) and 72% was real.

Internet/Mail Order – 19: CPI = -0.1%. Sales were +12.7%. 20: CPI = 0.3%. Sales skyrocketed, +35.2%. 21: CPI = 2.4%. Growth slowed but was still +15.4%. 22: CPI increased to 5.7% and sales were +12.2%. Now only 51% of the growth was real. 23: CPI dropped to 2.2% but sales growth slowed to 8.9%, 30% below 2019. They are by far the 19>23 growth leader, +90.6% and 79% of their increase was real.

Recap: The retail journey from 2019>23 was complex, so you have to look deeper than the overall sales to better understand what was happening. The Pandemic and the worst inflation in 40 years were major traumas. Factoring inflation into the data to get the real changes was especially important. You see that different channels took different paths. Retail has largely recovered from the Pandemic, but the price surge recovery is still ongoing.

Retail Channel Monthly $ Update – January Final & February Advance

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In February, Commodities inflation vs last year rose from 0.1% in January to 0.3%. Although down from its peak, cumulative inflation still impacts consumer spending. The sales increase rate is lower than in recent years for most channels and even below the inflation rate in a number of cases. A sales increase below inflation indicates a drop in the amount of product sold. The recovery continues but there is still a long road ahead, so we’ll continue to track the retail market with data from 2 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 January Final Report and then go to the Advance Report for February. 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 last year and vs 2021.
    • Current Month Real change vs last year and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for this year vs last year, 2021 & 2019. (For Jan, Monthly = Ytd)
    • Current Ytd Real change % for this year vs last year and vs 2021 and 2019
  • Monthly & Ytd $ & CPIs for this year vs last year and vs 2021 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the January Final. All were down from December. However, all but Gas Stations were up vs 23, 21 & 19. Considering inflation, the # of real drops vs last year & 21 (4) were the same as December. Gas Stations are still really down vs 2019 but for the 3rd straight month, Relevant Retail is “really” up vs all years. ($ are Not Seasonally Adjusted)

The January Final is $3.7B less than the Advance report. Restaurants: -$2.6B; Auto: -$0.7B; Gas Stations: +$0.1B; Relevant Retail: -$0.3B. As expected, $ were down for all vs December, but actual sales for all but Gas Stations were positive in all measurements vs 23, 21 & 19. Gas prices fell but Gas Stations sales were down vs 23. There were 5 “real” sales drops, 3 from Gas Stations. The real measurement vs last year for Relevant Retail was positive again at +2.3%. Total Retail also has all positive measurements (actual & real) vs 23, 21 & 19. Restaurants have the biggest increases vs 21 & 19 but Relevant Retail is still the top “real” performer vs 2019. However, only 53% of their growth is real.

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

Overall– All were down from December. vs 23, 6 were both actually and “really” up. Vs 21, 10 were up but only 4 were real increases. Vs 2019, Off/Gift/Souv were actually & really down. Plus, Home Ctr & Hardware were also really down

  • Building Material Stores – The pandemic focus on home has produced sales growth of 23.6% since 2019. Prices for the Bldg/Matl group have inflated 20.5% since 2021 which is having an impact. Both HomeCtr/Hdwe and Farm stores are only actually up vs 21 & 19. However, all real measurements vs 22 & 21 are negative for both and Home Ctr/Hdwe is now really down vs 19. This means that only 2.1% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 4.0%, Real: -0.2%; Farm: 6.2%, Real: 1.9%
  • 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 60% lower than Drug/Med products. Drug Stores are positive in all measurements and 68% of their 2019>24 growth is real. All actual $ are up for Supermarkets and inflation is slowing but their 24 real sales are still down vs 21. Only 5% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.1%, Real: +0.3%; Drug Stores: +4.9%, Real: +3.4%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -42.2% from December, but their only other negatives are actual & real vs 21. Prices are still deflating, -1.1% vs 23, a big change from +1.5% in 22>23 and especially the +8.2% in 21>22. The result is that 66.5% of their 50.5% lift since 2019 is real. Their Avg 19>24 Growth Rate is: +8.5%; Real: +6.0%.
  • Gen Mdse Stores – All were down vs December. Actual sales vs 21 & 19 were up for all but only $/Value had a lift vs 23. Real sales for Clubs & Disc Dept Stores were down vs 23 & 21. $/Value Stores were up vs all years. Disc Dept Strs are now really positive vs 19 but only 23% of their growth is real. The other channels average 41% in real growth. Avg 19>24 Growth: SupCtr/Club: 5.3%, Real: 2.2%; $/Value Strs: +6.3%, Real: +3.2%; Disc. Dept. Strs: +2.5%, Real: +0.6%
  • Office, Gift & Souvenir Stores – Actual sales are down -32.5% from December, and they are negative in all measurements but vs 21. Their real sales numbers are all negative including -15.0% vs 2019. Their recovery started late, and their slow progress has stalled since June. Avg Growth Rate: -1.3%, Real: -3.2%
  • Internet/Mail Order – $ are down -20.3% from December but set a new monthly record of $105.0B. All measurements are positive, but their growth is only 63.5% of their average since 2019. However, 83.4% of their 119.7% growth since 2019 is real. Avg Growth: +17.0%, Real: +14.8%. 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, rose in Sep>Nov, then fell in Dec>Jan. However, all measurements vs 22, 21 & 19 are positive. They are in 2nd place, behind the Internet, in the % increase vs 19 but the leader vs 21. (Only ahead of the Internet by +0.9%). 56% of their 70.4% growth since 2019 is real. Average 19>24 Growth: +11.2%, Real: +9.1%.

Cumulative inflation is becoming more important in Retail. In actual $, 6 channels reported sales increases vs 23 & 10 vs 21. When you factor in inflation, the number with “real” growth is still 6 vs 23 but only 4 vs 21. Inflation’s is slowing but it is still lowering sales increases. The January  lift vs 23 was only 18% of the 22>23 increase. The impact is also visible in specific retail channels. The commodities CPI increased slightly in February. Let’s look for any impact on Retail $ales.

February sales vs January grew for all big groups but Relevant Retail – a big surprise. A Jan>Feb Total Retail lift has only happened once in the last 30 years -2016 (+0.7%). That was also the only year that February wasn’t on the bottom in Retail Sales. All actual $ measurements are again positive vs 23, 21 & 19 for all big groups but Gas Stations, and the lifts vs 2023 have improved. Inflation is still a big factor. The national CPI grew from 3.1% to 3.2% but is still 18.0% vs 21. The all commodities rate, which is the best pricing measure for Retail, grew from 0.1% to 0.3% and is 17.4% vs 21. Here is some “real” good news. In February only 1 measurement was “really” down vs 22 & 21 and it came from Gas Stations. Relevant Retail’s real monthly sales vs last year have now been positive for 8 straight months, but the best news is that Relevant Retail is positive in all measurements vs last year, 2021 and 2019 for the 4th consecutive month.

Overall – Inflation Reality – For Total Retail, inflation grew but all real sales are again positive. For Restaurants, inflation remains high, +4.5% but they are really positive vs 22 & 21. Gas prices are still deflating but that group is in turmoil. Auto prices are down but still up 19.6% vs 21 which significantly slowed their real sales. Inflation is down to 0.1% for Relevant Retail and all of their real sales are positive for the 4th  straight month. They continue to make slow progress.

Total Retail – Since June 20, every month but April 23 has set a monthly sales record. In 2023 Sales were on a roller coaster. Up in Jul>Aug, down in Sept, up in Oct>Dec (new record), down in Jan 24, then unexpectedly up in Feb. Inflation grew but is only 0.3%. YOY sales growth is still low. Sales are up 3.4% Ytd vs last year, but this is only 46% of their avg 19>24 growth. All real sales are positive again but only 41% of the 19>24 growth is real. YOY inflation in Total Retail has significantly slowed but we still see its cumulative impact. Growth: 23>24: 3.4%; Avg 19>24: +7.4%, Real: +3.3%.

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 $96B in December 23 and exceeding $1T for the 1st time. They have the biggest increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 4.5% from 5.0% last month but is still +20.6% vs 21 and +25.6% vs 19. 40.4% of their 52.4% growth since 19 is real and they fell to 3rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.3%; Avg 19>24:+8.8%, Real: +3.9%. They just account for 13.4% 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 Y/E real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 was a true rollercoaster but the $ grew in December pushing them to a new record, $1.595T. $ fell in January but surprisingly grew in February. All numbers are positive. Prices vs 23 are -0.3%. Only 29% of their 19>24 growth is real. Growth: 3.1%; Avg 19>24: +6.5%, Real: +2.0%.

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, then strongly fell in Mar>Jul to -20.2%. In August they turned up to -3.7%. In Sep they were +2.7% but then began deflating and are -4.2% in Feb. Pricing is a big factor in the actual $ drop vs 23 but only Ytd real sales vs 21 & 19 are negative.  Growth: -4.3%; Avg 19>24: +5.5%, Real: -1.1%. Their data shows the cumulative impact of inflation and demonstrates 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, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in January and February which is normal for all years but 2024. The -1.6% drop is much better than the -4.4% average since 2019. However, the big news is that all real sales vs last year, 21 & 19 are positive for a 4th consecutive month. 54% of their 44.5% 19>24 growth is real – #1 in performance. Growth: 3.9%; Avg 19>24: +7.6%, Real: +4.4%. This is where America shops. They finished 2023 and now have started up 2024 with all positive sales vs last year, 21 & 19. This is great news!

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, but the Jan>Feb lift and the fact that 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 turmoil in Gas Stations’ sales. The biggest positive is from Relevant Retail. All sales measurements are again positive. This means that consumers not only spent more $ in 2023 and in Jan & Feb 24 vs last year, 21 & 19, they also bought more product. The turnaround continues to gain ground.

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

  • Relevant Retail: Growth: +3.9%; Avg: +7.6%, Real: +4.4%. 6 were up from Jan. Vs Feb 23: 8 were up, Real: 10. Vs Feb 21: 10 were up, Real: 8. Vs 19: Only Dept Stores were actually & really down. Furnishing stores were also “really” down.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are up from January. Their actual & real $ are only up vs Feb 23 & 21. All Ytd numbers are actually and really down, even vs 2019. Growth: -2.1%; Avg 19>24: +0.6%, Real: -1.3%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are up from January. In fact, both actual and real sales are positive in all measurements. However, only 44% of their 33.6% 19>24 lift is real – inflation’s impact. Note: Growth exceeds Avg. Growth: 3.1%; Avg: +2.8%, Real: +2.5%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are down from January but up monthly and Ytd vs 22, 21 & 19. However, inflation hit them hard. Real $ are down vs 21 and only 14% of the growth since 2019 is real. Growth: 2.7%; Avg 19>24: +5.7%, Real: +0.9%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are down from Jan but positive in all other measurements, actual & real. Inflation has been relatively low so 67% of their 27.4% growth from 2019 is real. Note: Their growth is above the 19>24 avg. Growth: 5.7%; Avg 19>24: +5.0%, Real: +3.4%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are up 12.8% from January and positive in all comparisons, actual & real vs 22, 21 & 19. Plus, 74% of their 19>24 growth is real. Growth: 2.4%; Avg 19>24: +3.9%, Real:+3.0%
  • 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 up from January but negative in all other measurements but actual vs Feb 21 & 2019. Even their 19>24 real growth is negative. Growth: -9.2%; Avg 19>24: +2.3%, Real: -0.4%.
  • 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 January, but they may have “turned it around”. Sales are now positive in all measurements. Note: Their growth also exceeds the average. Growth: +3.3%; Avg 19>24: +0.9%, Real: +3.5%.
  • 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. Prices are now deflating, and sales are up from January but they are only positive vs 21 & 19. Prices are deflating but still high, 19.7% above 21. Real sales are negative for all but vs Feb 23 & 2019. Also, just 24% of their 19>24 sales growth is real. Growth: -4.2%; Avg 19>24: +4.3%, Real: +1.5%.
  • 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 sales are down from January and vs 23. However, due in part to recent deflation, real sales are positive in all measurements. Their inflation rate has been lower than most groups so 71% of their 29.5% growth since 2019 is real. Growth: -1.0%; Avg 19>24: +5.3%, Real: +3.9%.
  • 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 January and have returned to being positive in all measurements – both actual & real. They are still 2nd in increase size vs 19 and moved back up to 2nd from 3rd vs 21. 73% of their 52.3% 19>24 growth is real. Growth: +4.1%; Avg 19>24: +8.8%, Real: 6.6%.
  • NonStore Retailers – 90% of their $ 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 22/23 but is back to double digits. $ales are down from January but up in all other measurements. 81.3% of their 105.8% 2019>24 growth is real. Growth: 10.0%; Avg: +15.5%, Real: +13.2%

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 has helped the Retail Situation. Surprisingly, Sales grew from January for all but Relevant Retail. Their drop was driven by NonStore, Grocery, Health/Drug & Sporting Gds. Inflation is slowing in most channels and even deflating in some. However, we are still seeing the impact of high cumulative inflation in some channels. Only a few channels are doing well. The new problem is that the YOY sales increase rate for almost all channels has markedly slowed. In February, only SupCtr/Club/$, Health/Drug & Electronics had a Ytd lift above their 19>24 Avg. This is bad, but better than January, when there was only 1. Some great news is that Relevant Retail has been positive in all measurements for 4 straight months. However, in February, 5 of 11 channels were really down vs 23. The slow turnaround continues, and we are making progress, but we still have a long way to go for a full recovery.

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 since 2021 to show cumulative inflation.

Monthly YOY 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 2024 – February Update: Drops to +3.5% vs 2023

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The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec 23, but turned up again in Jan>Feb 24. The CPI increased slightly in February to +3.2% from +3.1% in January. However, Grocery inflation continues to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +1.0%, 12 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. At 3.5% in February, it is still 9% above the national rate, but down from +52% in January. We will look deeper into the numbers. The 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 24 vs 23 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (22>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2024 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2024
  • 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 February 22 to February 24. 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 segment patterns and compare them to the overall U.S. CPI. The year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In February, Pet prices were up 0.3% from last month as lifts in Vet, Services & Supplies overcame a -0.9% drop in Food.

In Feb 22, the CPI was +10.4% and Pet prices were +7.0%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. 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. In Nov, all but Food & Vet fell. In Dec, Supplies & Vet  drove prices up. In Jan/Feb Pet prices grew despite 2 drops by Food & 1 by Vet. Now, Total Pet and all but Food are at their pricing peak.

  • 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, dipped in Oct>Dec, then rose Jan>Feb 24, but 33% of the 20.8% increase in the 50 months since Dec 2019 happened in the 6 months from Jan>Jun 2022 – 12% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. In Jun>Aug they dipped, grew Sep>Nov, then fell in Dec>Feb. 99% of the 21.7% increase occurred in 22 & 23.
  • Pet Supplies – Supplies prices were high in Dec 19 due to tariffs. They then had a “deflated” roller coaster ride until mid-21 when they returned to Dec 19 prices and essentially stayed there until 22. They turned up in Jan 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. They fell in Mar, but set a new record in May, then continued the rollercoaster ride with lifts in Dec>Feb, back to May prices.
  • 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 prices got on a rollercoaster in Mar>Jun. They turned up Jul 22>Mar 23 but the increase slowed in April and prices fell in May. They rose again Jun>Aug, fell in Sep>Dec, then spiked in Jan>Feb.
  • Veterinary – Inflation has been consistent. Prices turned up in Mar 20 and grew through 21. A surge began in Dec 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, grew Sep>Dec, fell in Jan 24, then set a record in Feb.
  • Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in Nov. In December prices turned up and grew through February to a new record high. Prices are at a record high for all segments but Food and Petflation has been above the National CPI since Nov 22.

Next, we’ll turn our attention to the Year Over Year inflation rate change for February and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation fell to 3.5%, down from 4.7% in January. It is now only 9% higher than the National rate. In January, it was +52%. The chart will allow you to compare the inflation rates of 23>24 to 22>23 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. We’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.6% from January but were +3.2% vs February 23, up from +3.1% last month. Grocery inflation is down again, to +1.0% from +1.2%. 2 of 9 categories had a price decrease from last month – Pet Food & Medical Services. There were also 2 in January. That’s 3 consecutive months for Pet Food. The national YOY monthly CPI rate of 3.2% is up but still only 53% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 2 segments – Medical Services & Haircuts – both Services categories. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 97.9% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.0% while the CPI for Commodities is +0.7%. This clearly shows that Services are driving most of the current 3.2% inflation.

  • U.S. CPI– Prices are +0.6% from January. The YOY increase is 3.2%, up from 3.1%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 60% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 lifts – not good news! The current rate is 47% below 22>23 but the 21>24 rate is still 18.0%. That is 78.9% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are -0.9% vs January and +2.6% vs February 23, down from 4.8%. However, they are still 2.6 times the Food at Home inflation rate. The YOY increase of 2.6% is being measured against a time when prices were 20.7% above the 2019 level, but that increase is still 1.5 times the pre-pandemic 1.7% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 91.8% of the total 24.5% inflation since 2019.
  • Food at Home – Prices are up +0.1% from January, but the monthly YOY increase is 1.0%, down from 1.2% last month and radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.2% Inflation for this category since 2019 is 15% more than the national CPI and is in 3rd place behind Vet & Pet Services. 79.8% of the inflation since 2019 occurred from 2021>24. This mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>21 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 1.0% from January and 0.9% vs February 2023. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 months of increases pushed them to a new record high in Feb 23. Prices fell in March, bounced back in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, then grew again in Dec>Feb back to the May record level.
  • Veterinary Services – Prices are +0.9% from January, but they are +7.9% from 2023, again the highest rate in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 36.3% compared to Pet Services, 26.4% and Groceries, 26.2%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 69% of the cumulative inflation since 2019 occurred from 2021>24.
  • 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 fell -0.02% from January, but they are +1.1% vs last year. Medical Services are not a big part of the current surge as only 39% of the 14.7% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices have surged, +1.0% from January but +5.2% vs last year. However, inflation is still well below the +8.0% back in March 23. Now, 78% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. BTW: They have the 2nd highest 19>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.3% from January and +3.9% from 23. 3 of the last 4 months have been <4.0%. Inflation has been rather consistent as 59% of the inflation from 19>24 happened in 60% of the time.
  • Total Pet– Petflation is 68% lower than the 22>23 rate and now only 9% higher than the U.S. CPI. For February, 3.5% is still the 8th highest rate since 1997. Vs January, prices grew +0.3% as all but Pet Food had strong lifts. A Jan>Feb price increase has happened every year but 2018 since 1997, with an average lift of 0.4%. In terms of Petflation, 2024 started just as we should have expected with 1 exception. Veterinary & Pet Food are still the Petflation leaders since 2021 but Pet Services replaced Pet Food in the #2 spot for Petflation since 2019.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 5 of 9 categories – 4 Pet – Pet Food, Services, Vet & Total Pet, plus Groceries. The 23>24 rate is much lower for all but Veterinary, Pet Services & Haircuts. It actually has the 2nd highest rate in Veterinary. 21>22 still has the highest rate for the National CPI & Pet Supplies. The average annual national inflation in the 5 years since 2019  is 4.2%. Only 2 of the categories are below that rate – Medical Services (2.8%) and Pet Supplies (2.3%). It comes as no surprise that Veterinary Services has the highest average rate (6.4%), but all 6 other categories are +4.6% or higher.

  • U.S. CPI – The 23>24 rate is 3.1%, the same as January, but down 50% from 22>23 and 60% less than 21>22. It is also 26% below the average YOY increase from 2019>2024, but it’s still 72% more than the average annual increase from 2018>2021. 79% of the 20.6% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 3.7%, down from 4.8% in January and 75% less than the 22>23 rate. However, it is still 16% higher than 21>22 and 2.3 times the average rate from 2018>2021. Pet Food has the highest 22>23 rate on the chart but has fallen to 2nd in the 21>24 rates. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022 and especially in 2023. 91% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down 90% from 22>23, 86% from 21>22 and even 69% from 20>21. However, it is still 32% higher than the average rate from 2018>20. It has the 2nd highest inflation since 2019 and beat the U.S. CPI by 16%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased in Jan & Feb, but the 2024 inflation rate of 0.7% is only higher than the -3.5% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were ≈6.2% in 22 & 23. The 2021 deflation created a unique situation. Prices are up 12.1% from 2019 but 113% of this increase happened from 2021>24. Prices are up 13.7% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022, peaked in 2023 and now continues at the start of 2024. On the chart they are #1 in inflation since 2019 and since 2021. At +6.4%, they have the highest average annual inflation rate since 2019. It is 1.5 times higher than the National Average but 2.3 times higher than the Inflation average for Medical Services. 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. Ytd it is 0.8%. Except for 19>20, it has been between 2.4>3.0%. We are still seeing the impact of 2023 when prices actually deflated (-0.3%). This was the only deflationary year since the US BLS began tracking this category in 1935.
  • Pet Services – After falling in late 2023, prices have surged in 2024. The Ytd 23>24 inflation rate of 5.0% is 2nd to Veterinary in the Pet Industry. It is 38% less than 22>23 and 17% below 21>22. However, it is still 1.7 times higher than the 2018>21 average rate. Also, for the first time, Pet Services prices have inflated over 20% vs 2019 and 2021.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 4.0%, which is 29% below the 20>21 peak but still 21% above the 18>20 average. Consumers are paying 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 4.1%, down from 4.7%. It is 62% less than 22>23 but 80% higher than the 2018>21 average rate. It is also still 1.3 times the national CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food Prices. Veterinary prices are still 8.7% higher than last year and inflation in Supplies and Services actually increased in February.

Petflation is slowing, but it is still strong, with the 8th highest rate for February in history. It is also still higher than the National CPI. Back In 2021 it was only half of that rate. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.0% above 2021 and 25.6% higher than 2019. Those are big lifts. In fact, in February prices for all segments but Food are the highest in history. Food prices are only 1.3% below their May peak and only Supplies prices (+12.1%) are less than 25% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Non-Vet Services will be the least impacted as it is driven by high income CUs. Veterinary will likely see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies will likely see a reduction in purchase frequency and some Pet Parents may even downgrade their Pet Food. Both segments will see a strong movement to online purchasing and private label products. Some direct evidence of this impact is apparent at GPE 24 where a record number of exhibitors are offering OEM services. Strong inflation has a widespread impact.

Comparing the Spending Demographics of the Industry Segments – SIDE BY SIDE

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The first reports of our Pet Spending Demographics analysis have been very detailed and intense. We looked at the industry as a whole and each of the individual segments. Recent years have seen some turmoil. We have seen the very real impact of outside influences on the industry. In the 2nd half of 2018, the FDA warning on grain free dog food caused a $2.3B drop in Food $ and new Tariffs flattened Supplies $, but Services had a record lift. In 2019, Food rebounded but the tariffs really hit the Supplies segment with a $3B drop. Veterinary $ grew slightly while Services $ fell a bit. The net was -0.2% drop in Total Pet. The 2020 pandemic had varied impacts as Pet Parents focused on needs. This caused a lift in Veterinary and a huge increase in Food because some demographics binge bought out of fear of shortages. Services spending plummeted due to outlet closures and restrictions while Supplies $ continued to fall because consumers saw them as more discretionary. 2021 brought a big change, Food $ fell because there was no “binge” repeat. However, Pet Parents focused on their “children” producing a widespread record lift in all other segments and a record $16B increase. In 2022, after the record lift in 2021, spending fell in Supplies and Veterinary but Food had a strong 12.5% increase and Services continued to surge. This combination produced a 2.7% increase in Total Pet $

We have often referenced the similarities and differences in spending between Total Pet and the individual industry segments. Total Pet Spending is a sum of the parts and not all parts are equal. In this final report we are going to put the segments side by side to make the parallels, differences and changes from 2021 more readily apparent. We will address:

  • “The big spenders” – those groups which account for the bulk of pet spending.
  • The best and worst performing segments in each of twelve demographic categories
  • The segments with the biggest changes in spending $ – both positive and negative
  • “Honorable Mention” – Only segments that received this “honor” at least twice in 2022
  • And of course, the “Ultimate Spending CUs”

The emphasis is on “visual” side by side comparisons to allow you to quickly compare the industry segments. We’ll try to minimalize our comments. You can always reference one of the specific reports for more details. We’ll also break the charts up into smaller pieces that are demographically related to make the comparison more focused and easier.

Before we get started, let’s take a look at the current market share of the industry segments. The following 2 charts show the 2022 share of spending for each segment and the evolution over the past 30 years. 1992 was the last year that the Food Segment accounted for 50% of Total Pet Spending. By the way, Total Pet Spending was $16.2B in 1992. We have come a long way, +534%; annual growth rate of 6.35%. This will help put our comparisons into better perspective.

2021>2022 CHANGE IN SHARE of TOTAL PET $

Food: 37.7%; Up from 34.4%

Supplies: 21.4%; Down from 23.8%

Veterinary: 28.9%; Down from 32.7%

Services: 12.0%; Up from 9.1%

In 2022, Supplies & Veterinary lost almost 7% of share in Total Pet $ which was picked up by Food & Services. The most notable trend from 1992 to 2012 was the decline in Food share while Supplies gained in importance. Both of those have ended. In recent years, the Product Segments have been on a rollercoaster. Food reached 44% in 2020, the highest level since 44.8% in 1998. Supplies have been trending down since 2012, hitting bottom at 18.1% in 2020. The Services segments have been more stable. They have generally trended up since 2012. After falling to 8.2% in 2020, Non-Vet Services peaked at 12% in 2022. Except for the big lift in 2021 which pushed them above 30%, Veterinary has been in the 25>28% range since 2012. All are impacted by outside influences but big trends in Food and Petflation in Supplies tend to make the Product Segments more volatile than the Services Segments.

Now let’s get started with a look at the “Big Spenders”. The following 2 charts will compare the market share and performance in all Pet Industry segments by the groups responsible for the bulk of the spending in 10 demographic categories. These are the groups that we identified in our Total Pet analysis to generate at least a 60% market share of spending. As you recall, to better target the spending we altered 3 groups in Services (Area, Education and Income) and 1 in Veterinary (Education). However, to have a true side by side comparison we need to use the same groups for all. Since these 4 groups are a different size from our original analysis, the share of spending will be different. However, all meet or exceed our 60% share minimum.

The chart makes it especially easy to compare share and performance across categories. Remember, performance levels above 120% show a very high level of importance for this category in terms of increased spending. Unfortunately, it also indicates a high spending disparity among the segments within the category. There are 2 charts, each with 5 categories. The categories are listed in their order of share of Total Pet $ – from highest to lowest.

  • White, Non-Hispanic – This group has an 81+% market share in every Segment. Minorities account for 32.8% of CUs but only 14>18% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. Whites lost share in Total & Products but gained in both Service segments. Asians had the same pattern and Hispanics were down in all but Food. African Americans gained in all.
  • Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. Only the Supplies share is below 80%. The group gained 1.2% in Total Pet share. The only decrease was -0.2% in Food. The lift was driven by those w/o a mortgage. They had gains in all but Veterinary. Those with a mortgage also had a small increase in Total but their only segment gain was a 3.1% increase in Veterinary.
  • 2+ People in CU – 2+ is still the key in pet ownership. However, the results were mixed by size. Singles had more CUs but lost share in all but Services so 2+ CUs had the opposite pattern. 2 People only gained in Supplies & Services. 4 people had the opposite pattern but 3 People gained in all. 5 People was the only 2+ size to gain in share of CUs but they only gained share in Food spending and had the biggest drop in Total Pet.
  • Suburban & Rural – They lost -0.1% in Total Pet but gained in Food & Services. Both the Suburbs 2500> and Areas <2500 had drops in Veterinary but opposite patterns in Total and the other segments. The Big Suburbs were only up in Food. The areas <2500 only lost share in Food. Center City was up in Total due to gains in Veterinary & Supplies.
  • Associate’s Degree > – A huge drop in spending by College Grads caused us to expand this group to include those with an Associate’s Degree to reach our 60% minimum share. This resulted in an increase in share but a drop in performance for all segments. Despite a great year from Associate’s Degree, the new group lost share in all but Services from 2021. Overall, Higher Education is also less important. In 2021, it usually ranked 2nd. In 2022, it is still 2nd for Services but fell in Total and all other segments, even falling to 7th in Food.

  • Over $70K Income – INCOME MATTERS MOST IN PET SPENDING! Income has grown in importance in recent years and all Industry segments, but Food performed at 140+%. Over $70K gained 2.5% in CU share but lost -0.7% in Total, -2.6% in Food and -1.8% in Veterinary. The other segments gained share – Supplies, +2.6% & Services, +3.0%. The <$70K group obviously had the exact opposite pattern. Food & Veterinary spending became slightly more balanced while the income spending disparity gap widened for the discretionary Supplies & Services segments.
  • Everyone Works – Income is important, but the importance of # of Earners fell for all but Food in 2022. Despite a strong year for 3+ Earners the Everyone works group lost share in all but Food. The Food lift was strong enough to generate a gain in Total. In terms of performance, only Services is 120+%. In 2021, Supplies & Vet were also 120+%.
  • All Wage & Salary Earners– Incomes vary widely in this group, so performance is often lower. 2022 was different. The group gained 0.9% in CU share. Total Pet and all segments, but Veterinary gained in spending share. Veterinary lost -0.5% in share and -2.6% in performance. Supplies had the biggest lift – +7.8% in share and +11.4% in performance. The increase was driven by a combination of Managers/Professionals and Blue Collar workers.
  • Married Couples – Marriage is 1st in importance to spending in Food, 2nd in Total, Supplies & Veterinary but falls to 3rd in Services. In 2022 their share & performance increased in Total, Food & Services but fell in Veterinary & Supplies. The best performer inside the group was CUs with a child 18>. Outside of the group, it was Single Parents.
  • 35 to 64 yrs – Includes the 3 highest income segments. They only gained share in Total Pet (+0.3%) and Food (+6.0%). The 45>54 yr-olds gained share in all segments but their lift couldn’t overcome big losses by the 35>44 yr-olds in all segments but Food. The good news is that their Food share is now above 60% (61.1%).

Now we’ll look at the Best/Worst performers in each category. Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2021. The categories are divided into related groups. 1st, Income

  • Income – Income matters. All winners were $150K>. The Supplies winner was $150>199K down from $200K> in 2021 and the disparity between 1st and last place fell by 90%. The disparity gap in Veterinary narrowed by only 5% but it narrowed by at least 30% for Food, Services & Total Pet. More balanced spending.
  • # Earners – More earners = more income. The highest income 3+ Earners segment is now on top for all. Note: They are most likely Gen Xers. No Earner, Singles (70+ yr-olds) retained their position at the bottom. The spending disparity gap narrowed by only 6% for Supplies. In the other segments it shrank by at least 15%.
  • Occupation– Mgrs & Professionals are #1 in CU income and expenditures and again the best performer in all segments. Blue Collar workers had a strong year in all but Services. They were replaced at the bottom by Service Workers or Retirees. The spending disparity actually increased by 21% in Services and by 4>9% in Food, Supplies & Total Pet. It did fall slightly, -3.5% in Veterinary.

Next are demographics of which we have no control – Age, Generation and Racial/Ethnicity

  • Racial/Ethnic– As expected, White Non-Hispanics are the top performer in all segments and African Americans occupy all the bottom slots. African Americans have the lowest income and only 25% own Pets. However, they had a strong 2022. They got the performance gap below 100% in all segments, including a 24% drop to 75% in Supplies.
  • Age – The 45>54 yr-olds now “rule”. The bottom is a mixture of young & old. 75> is the worst in Products while <25 loses in Services & Total. The spending disparity increased by 10% to 110% in Veterinary, but it fell in Total and all other segments, including a 62% drop in Supplies to 75%. Now, only the disparity in Veterinary is above 100%.
  • Generation – Gen X still “rules”. Gen Z is still at the bottom in Service segments while Born <1946 is the worst in the others. The disparity gap narrowed for all. The drop was in double digits for all but Veterinary. Now, all are <100%.

In the next 6 categories, we have at least some control

  • Education – Winning is tied to higher Education which generally correlates with income. The losers are all below an Associate’s degree. The disparity gap shrank significantly for all with an average drop of 53%. Only Services is 100+%.
  • CU Composition – 7 of 10 best/worst are different from 2021. Except for Services, kids win. The oldest kid 18> aligns with the 45>54 age group. Singles are the most common worst. Disparity lessened for all – an average drop of 32%.
  • CU Size– The top CU number is mixed, but generally 3+. “1” remains solidly on the bottom. The disparity is also bigger in all but Supplies. Disparity dropped 60% in Supplies and 4% in Services but rose in Total & other segments.
  • Housing – The perennial winner and loser. Disparity dropped slightly in Products & Services but rose in Vet & Total.
  • Area– <2500 population is on top & Central City is on the bottom. The disparity dropped by 9+% for Total and all but Services, which increased by 11%. This is a surprise. Services spending usually skews towards higher population.
  • Region – A strong year for the Midwest. The South is at the bottom in all but Supplies. The disparity in Food increased by 0.3%. Total & all other segments had double digit drops, led by Supplies which fell 62%.

Here are the categories with the biggest & smallest disparities for Total Pet & each industry segment.

I’m sure the fact that income produces the biggest spending disparity for all is no surprise. Pet spending is driven by income. The Regional “wins” reflect the growing national balance in product spending. In Area Type, Services spending is expanding beyond high population areas while Veterinary spending is now growing in Center City.

Now, here are two summary charts. The first compares the averages.

The return to “normal” is very apparent as the differences for all but Supplies are below 2019 levels. Supplies did have the biggest drop from 2021 (40%) and are less than 1% above 2019. Food has the lowest disparity for the 2nd straight year. The difference grows as you move from Products to Services. Non-Vet Services is again on top. The Veterinary disparity also fell but it is back to the 2nd highest. Total Pet fell 16% from 2021 to 78%, much more balanced.

  • Food – Down 13% from 2021, 16% from 2019, but 145% from the 2020 binge. Now they are the most balanced.
  • Supplies – The record 2021 increase produced a record disparity. The drop in 2022 brought a return to normal.
  • Veterinary – Their record lift increased the difference to over 100%. The sales drop pushed them below 2019.
  • Services – Despite a record lift in 2022, the gap narrowed by 8%, but they are the only segment over 100% .

This chart shows the number of new winners/losers.

There was much less turmoil than in 2021 but Food again led the “pack” with nearly half of the winners & losers changing as their spending rebounded from the drop in 2021.

  • With a 12.5% increase in 2022, Pet Food spending returned to a more normal pattern in 2022. The biggest change in performance was that over half of the losers moved off of the bottom.
  • Supplies spending fell sharply in 2022 but the impact only changed 4 of the 12 winners and 1 loser.
  • The Veterinary spending drop was also big but there were even fewer total changes than in Supplies.
  • Services had another record increase. It was widespread but produced few significant changes in performance.

Now, let’s look at the Demographic Segments with the Biggest Changes in $. We’ll truly see some differences between the Industry Segments. We have color highlighted differences from Total Pet. Plus:

  • ↔ = Winner/Loser same as 2021
  • ↕ = Flipped from 1st to Last or vice versa

First, the Income related categories.

  • Income – 3 winners & 5 losers were new with 3 flips. The winners are all over $100K but so are 2 of the losers. Only the loser in Services has a below average income. The $ drop in Vet & Supplies was driven by the big spenders in 21.
  • # Earners – All but 1 are new with 4 flips. In Food & Services, the winner & loser were driven by income. In Vet 2 Earners flipped to last & the lowest income won. 2+ CU Retirees had the smallest increase in Services but spent less in all other segments, especially Food. This flipped them to a more usual position at the bottom in Total Pet.
  • Occupation – 3 repeats while 4 flipped. The high income, Mgrs & Professionals had the biggest increase in all but Vet where they had the biggest drop – no surprise after their $2.3B lift in 21. Although not as large, Tech/Sls/Clerical had a similar spending pattern in Supplies. Blue Collar had a small increase in Services but stayed at the bottom. Petflation may have caused Retirees to downgrade their Food and pushed them to the bottom in Total & Food.

Now the Age and Racial/Ethnic Categories

  • Racial Ethnic – 3 repeats & 5 flips. White, non-Hispanics won in all but Supplies & Veterinary, where they were the big loser. In 2021 they had the biggest lifts in these segments. A strong year for African Americans while other minorities, Asians & Hispanics didn’t fare so well. Asians lost in Services & Food but Hispanics lost overall.
  • Age – All new with 5 flips. There were 3 different winners but all were over 45. In 2021, 35>44 had 3 wins. In 2022 there were 4 different losers. 35>44 lost overall and in Supplies. The 55>64 yr-olds flipped from 1st to last in Veterinary. Perhaps due to a downgrade, 75> lost in Food. <25 had a great year but it was driven by Products. They were down in both Services segments, including the only spending decrease by any age group in Non-Vet Services.
  • Generation – 2 repeats & 3 flips. Gen Z made their presence known with wins in Supplies and Total. They finished last in Services but still spent more. Gen X won Food & Veterinary but flipped to the bottom in Supplies. Millennials flipped from 1st to last in Veterinary. The Food & Total Pet losers were new – the oldest group, Born <1946.

Now, here are more Demographic Categories in which the consumers can make choices.

  • Education – 1 repeat & 4 flips. Higher education is usually tied to increased income and pet spending but not in 2022. Services had the only “normal” pattern. It was a strong year for <BA/BS, especially for Associates Degree. Adv. College Degree had a huge lift in 2021 and the biggest drops in Total and all segments but Services.
  • CU Comp. – Married with Children were the best performers in Total Pet and all segments but Services. The success generally skewed a little older. Those with kids 6>17 lost in Total & Supplies and Unmarried CUs lost in both Service segments. Married, couple only lost in Food, a big turnaround from 2021 when they won in all but Supplies.
  • CU Size– 1 repeat & 4 flips. “3” was the magic number with wins in all but Services. The loser in Food & Veterinary was 2 People while the biggest CUs, 5+ lost in Supplies, Services & Total Pet.
  • Housing – 5 repeats, the most for any category & 3 flips. In Food & Services, all segments spent more. In Veterinary all spent less. Homeowners are on top. In Supplies & Total, it was those without a Mortgage. Except for the dual flip in Supplies which put Homeowners w/Mtges on the bottom, Renters were the biggest losers, which is the norm. However, we should note that they “lost” Food & Services while increasing their spending.
  • Area – 3 repeats with 5 flips. The big Suburbs are the normal winner. They held onto the top spot in Services & Total and won in Food. After big lifts in 2021, they dropped to last in Supplies & Veterinary. Central City also had a strong but mixed year. They flipped to the top in Supplies & Veterinary although they spent less in Vet $. They lost in Food & even in Services, despite a $0.8B lift. Rural Areas lost in Total despite a lift that was only 18% less than the winner.
  • Region – No repeats but 6 flips. The Midwest took control with wins in all but Supplies, where the South edged them out by $0.06B for the win. In an unusual situation, the West finished at the bottom in Total, Food & Supplies. However, they did have the biggest lift in 2021. The Northeast lost in both Service segments despite a lift in Non-Vet.

The next chart compares the number of repeats, “flips” and new segments among the 12 winners and 12 losers for each industry segment. The idea is to look for patterns in the data that cross segments. Let’s take a look.

  • Food & Services $ grew while Supplies & Veterinary $ fell. The resulting turmoil is most apparent in the $ changes.
  • With 2 straight record increases, Services led the way in stability with repeats by 83% of 2021 winners.
  • With big turnarounds in spending, Supplies (15), Veterinary (14) and Food (11) had the most flips. Veterinary & especially Supplies were mostly 1st to last while the Food flips were slightly positive. In a clear demonstration of widespread stability, Services had no flips.
  • Both patterns were evident in Total Pet as 42% flipped but 1st to last & last to 1st were equal in number.
  • There are a total of 24 winners and losers. Here’s the number different from 2021. Food: 22; Supplies: 23; Veterinary: 21; Services: 11; Total: 21. Any change in growth pattern causes more turmoil at the segment level.

Next, there were so many positive contributors that in each individual report we recognized 6 segments that didn’t win but still performed so well that they deserved Honorable Mention. I reviewed that list again and came up with segments that won Honorable Mention at least twice. Here are the 9 “SUPER Honorable Mentions” for 2022…

9 segments made the list, the same as 2021. Services had the biggest increase, +36%, but had only 1 segment on the list. 5 of their honorees either won in other segments or didn’t make the honor role. Food & Total Pet both had spending increases and tied for the lead with 6 segments on the “Super” list. All segments on this year’s list are generally “low profile” but contributed notably to the industry. We should give special kudos to Single Parents and those with an income of $40>49K. These 2 groups won Honorable Mention in 2 Industry segments and Total Pet.

Although the results were mixed, with numerous individual changes, here are some trends of note:

  1. Older Youth Movement – Boomers must inevitably fade. The Gen Xers are firmly at the top with spending skewing towards their older, wealthier members. Millennials are close behind and now Gen Z is “in the game”.
  2. The “Magic” number is 3+ – As spending has skewed younger the best performers in all but Services have 3 or more people. However, 2 person CUs still have the largest share of CU’s, 32.7% and 100+% performance in Total Pet and every segment. They’re not done yet.
  3. Improved spending balance – The performance gap between the best and worst narrowed in Total Pet and all segments. The disparity is now less than in 2019 for all but Supplies. However, we should note that Supplies narrowed the gap by 40% and their current disparity is only 0.7% more than 2019.
  4. Income is still the most important factor – The gap between best and worst narrowed in Total and all segments, but the disparity is still the biggest of any category. The best performer is always $150K+, while the worst is <$30K.

And Finally, What you have all been waiting for…

THE ULTIMATE 2022 PET SPENDING CUs – Side by Side

Color Highlighted cells are different from Total Pet; * = New in 2022

Methodology – The segments are chosen because they have the highest annual CU spending of any segment in the category. They may or may not have the most total dollars. That would depend upon the number of CUs in the group.

Final Comment – These “winners” further reinforce the key factors in increased pet spending:

Marriage– A commitment to another person demonstrates that you can make a commitment to your pet “children”.

CU Size – The “magic” number is 3+ for all but Services.

Homeownership/Area – Owning and controlling your own space has long been a key factor in Pet Parenting.

More space – Small suburbs near a big metro area offer the convenience of the city, plus room for more pets.

Income Matters Most – High Income, A High Paying Occupation, A College Degree, Everyone works with 2+ Earners. These are characteristics present in all of the Ultimate Pet Spending CUs.

Generation/Age – The highest income, 45>54 yr-old Gen Xers “rule”.

Region – Take your pick – Midwest or West, just not the Northeast or South.

I hope that this Visual Comparison helped you to get a “satellite view” of Pet Industry Spending in 2022. Please refer back to the individual segment reports to get more details.

There is one consistent winner in the Pet Industry…

…OUR PET CHILDREN

 

Attending GPE 2024? It is a showcase for New but has everything that you need! However, You Definitely Need a Plan!

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The first Global Pet Expo (APPMA) occurred 66 years ago with 17 exhibitors in 30 booths. The industry & the show have both come a long way since then.  The show is back to full strength and attendees at GPE 24 will see and experience:

  • 1137 separate exhibitor booths
  • With over 344,000 square feet of booths (Plus 45,000 sq ft for the New Product Showcase) Global Pet Expo 2022 actually occupies about 18 acres of prime Florida “real estate”.
  • 3000+ new items in the New Product Showcase and on the exhibit floor. Plus, 276 Exhibitors “new” to Pet Shows.
  • Sharing the aisles with an expected 15,000+ attendees, including more than 6000 “buyers”.
  • The opportunity to choose from 50+ educational sessions across 4 days from March 19-22.
  • 5 miles of aisles – just to walk the exhibit floor

The show floor is open for 24 hours so let’s put this in perspective and… “Do the Math!”

 If you don’t attend any seminars, visit the New Product Showcase, stop to chat with anyone in the aisles or for food, a drink or to go to the bathroom and maintain a walking speed of 2.5 mph, you can spend about 1 minutes and 10 seconds with each exhibitor…You definitely need a plan!

Global Pet Expo definitely has it all… and more. Attendees will find the broadest selection of products and services from 35 countries while Exhibitors have the opportunity to reach a wide range of buyers across all retail channels.

First and foremost, Global is about Pet Products – Food, Treats and a vast array of Supply categories. A regular flow of New Products is always critical to keep businesses and the whole industry strong and growing. Due to high Petflation, Private Label has beccome a hot trend in “new” and GPE 24 fills that need. There is a new Suppliers Floor Section and over 120 exhibitors pushing OEM. Obviously, you must take the time to visit the New Product Showcase. You should also sign up for any relevant classes, network with other industry professionals and…walk the whole show.  There are at least twice as many new products being “launched” on the show floor as there are on display in the New Product Showcase. Plus, 30% of GPE 24 exhibitors did not exhibit at a GPE from 2019>23 and 3/4 of these companies did no pet show during that period. Global is about gathering information and making decisions to improve your business – whether they are made on the spot or put on your “must do” list.

Every business can improve in terms of products. If you are a retailer, what sections of your store are not doing as well as you hoped and need a “facelift” or conversely, what areas are growing and need products to fill additional space? Category managers for distributors and retail chains may only be interested in targeted visits to exhibitors relevant to their “categories”. Representatives may be looking for new manufacturers…in specific product categories. Manufacturers could be looking to find distributors to handle their products or just looking to “check out” the competition. In regard to products, there is always something to see…for everyone!

And Global is the place to see it. It’s all there! With so much to see and do, Time is perhaps the most valuable commodity at the show. How do you make the most of your time on the show floor? Here’s an idea.

In 2014 I first designed a tool in Excel, the Super Search Exhibitor Visit Planner to make “working Global & SuperZoo easier and more productive for ALL attendees – retailers, distributors, reps, groomers, vets…even exhibitors. I have updated the data and produced a tool for every GPE and SuperZoo since then…including GPE 2024.

The “update” is not just exhibitor lists but also to the product category offerings for every exhibitor. I reviewed every exhibitor profile on the show site, but I also visited over 1300 websites and conducted separate internet searches to “validate” the product offerings. It is not 100% accurate, but it is close.

What does the SuperSearch do?… It searches for and produces a list of Exhibitors by product categories.

  • From the simplest – “give me a list that I can look at on my phone or tablet in either Booth # order or alphabetically”
  • To the most complex…”can do a simultaneous search for multiple specific product categories, allowing you to personally narrow down the initial results and see the “final” alphabetically or by booth number.” The GPE Super Search Exhibitor Visit Planner does both…and more…and does it quickly! Take a look at the Quick Start Guide. You will see that it looks complex but is really quite simple.

GPE 2024 Super Search Exhibitor Visit Planner – Quick Start Guide

First: When you download the Excel file, Remember to Enable Editing & Macros!

The GPE Super Search Exhibitor visit planner is designed to make your time on the show floor more efficient and more productive. With the Super Search you can conduct up to 5 separate and distinct product category searches simultaneously with consolidated results produced in booth # order to facilitate your “journey”. There are detailed instructions for reference and to help you understand the nuances of the tool. However, it is really very simple so let’s get started. (Note: No changes in instructions from 2023) Here is the Dashboard where you set up your searches. ↓

On the dashboard, the first things to note are the numerous category columns. There are 5 different floor sections, 11 different Exhibitor or Animal Types and 33 Dog and/or Cat Product categories. You can search exhibitors for any combination of these.

Let’s take a specific example running 3 simultaneous searches for several Dog/Cat categories:

  • Toys
  • Treats
  • Catnip & Litter (Must sell both)

Now referring to the Dashboard, let’s take it by the numbers:

  • This column is where you activate each search. Type in a “Y” (Cells C3>C7 will auto-capitalize) This search “line” becomes active.(cell turns green) In our example we are running 3 searches so we have 3 “Y”s.
  • Now we enter a 1 in the correct column for each search line. Search Line 1: Toys; Search Line 2: Treats.
  • In Search Line 3 we want exhibitors that sell both Catnip and Litter so we put a 1 in both of these columns.
  • Now we just “click” the Execute Search Button. The searches are done simultaneously and the results combined into a single list in alphabetical order.
  • If you would like to view the list in Booth # order, just click the Booth # Sort.
  • You can switch the list back to an alpha view by clicking the Alpha Sort Button.
  • To Clear all your search categories and start a new search, Click the Clear Criteria Button. Then click Execute (#4) again and you will be back to the full list

Note: Any Search Line with a Y and no 1’s in any column will always deliver the entire list regardless of what is selected in other lines. Change the Y back to an N in unused search lines. Now a sample of the results:

Company A – Has Toys Only; Company B has Dog Treats Only; Company C is on the list for Treats and also has Catnip, but no Litter. This is not unusual as Catnip is often a Treat; Company D has Treats & Toys. Company E has both Catnip and Litter and in fact, actually has it all!

Note: The Super Search highlights your search categories so you know “why you are there”. However, it also shows all categories that are available. Some might “pique” your interest while you are visiting the booth.

You can review the exhibitors alphabetically then put the list in Booth # order to make it easier to “work”. The Super Search also allows you to “cut down” the list during your review. (Pg 2; Point #11 – “U Pick ‘em” in Detailed Instructions) But First, I suggest that you “play” with the Super Search to get a “feel” for the tool, and then review the Detailed Instructions. With your “play” experience, the detailed instructions will become a “quick read” and a valuable reference. You will soon be “up to speed” on the full capabilities of Super Search. Good Luck and Good “Hunting” at GPE 2024!

Ready to Start Planning?

Use the links below to download the Super Search Tool (Be Sure to Enable Editing/Macros/Content if asked by your computer), the Quick Start Guide and the Detailed Instructions. Then GET STARTED!

Click to download Super Search Quick Start Guide (PDF)
Click to download Super Search Detailed Instructions (PDF)

NOW DOWNLOAD THE SEARCH TOOL

(For the Excel file to work on your computer, be sure to enable saving/macros/editing/content if asked.)

Click to download GPE 2024 Super Search 3-18 (Excel)

NOTE: Global Pet Expo 2024 opens in 2 days but there were a couple of exhibitor changes from 3/15>18. The latest file is dated 3-18. 2 Exhibitors dropped out and the APPA created a new lounge in the Supplier Section. As of 3/18 there are 2 available booths.

Earlier Changes: From 3/4 to 3/8, 2 exhibitors changed their name, orange highlight. Plus, 10 new exhibitors were added, light green highlight. The changes from 3/8 to 3/15 were: 1 name change and 3 moves, beige highlight. One new exhibitor was also added, light blue highlight. 1 exhibitor dropped out leaving 1 available booth, also highlighted in light blue. Always look at the date in the file name to make sure that you are using the most up-to-date version of GPE 24 SuperSearch.

GLOBAL PET EXPO 2024…Innovation in Motion!

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Global Pet Expo, the Pet Industry’s premiere event, is back to near “normal”. The exhibitor count is up from 2023 and should reach 1136 (+11% vs 23) by showtime. This is lower than the 1173 peak in 2019 but it is still more than enough.

Live events are critical in the Pet Industry because of our attitude towards Pets and Pet Products. Pets are an integral part of our families, and we now increasingly personify them. Pet shows are primarily focused on Pet Products. Studies have shown that over 60% of consumers prefer to make initial buying decisions on Pet Products in person. This makes Pet Products 2nd  only to fresh groceries in this behavior. This preference applies to all Pet Products buyers, not just consumers. The retailers and distributors attending GPE and SuperZoo want to see and touch a new product before they buy. Live shows are not just important, they are critical to the continued growth and strength of the Pet Industry.

The Pandemic crisis is over, but it has been replaced by a new worry – strong inflation. You will see evidence of its impact in the makeup of exhibitors at GPE 2024. Consumers are looking for Value (Quality + Price). One way to get it is through Private Label products. GPE 24  has  over 120 companies actively soliciting EOM customers. Foreign companies are especially capable of EOM, so their booth share has surged to 36%. The previous peak was 25% in 2019. These trends have also affected individual product categories. Now, let’s take a brief look at what awaits attendees of GPE 2024.

As we said, the show is smaller than the 2019 peak, both in square footage (-2.5%) and number of exhibitors (-3.3%) but there is still more than enough to satisfy the needs and wants of every buyer that attends. Here are some relevant facts.

  • 1110 Booths – assigned as of 2/16 but, with commitments the final count should be 1136
  • 344,000 sq ft of exhibit booth space (Not counting the 45,000 sq ft new product area)
  • 20 x 10 is again the most popular size – 411 (36.2%), but 10 x 10 is a close 2nd with 389 (34.2%)
  • Booths are smaller – the average size is 303 sq ft, -4% from 2023, largely due to the 10.9% increase in exhibitors.
  • Size matters – Booths 300 to 800 sq ft (25%) occupy 41% of the space. Those with 1000+ sq ft (5%) cover 24%.

Will you see any new exhibitors or is it the usual group? There have been 8 live pet trade shows from 2019>23 – 4 GPEs and 4 SZs. There are 1110 exhibitors at GPE 24 but It took 3305 companies to fill all 9 shows. Of the GPE 2024 exhibitors:

  • 167 (15%) – Did all 8 other shows
  • 692 (62%) – Did GPE 2023
  • 328 (30%) – Are new to GPE (at least from 2019>23)
  • 267 (24%) – Did NO other shows from 2019>2023

The percentage of exhibitors new to GPE this year is slightly above “normal”. There is definitely plenty of “New” to see.

Special “Floor Sections” at GPE account for 34.5% of Booths, up from 32.8% in 2019. This was due to the addition of Suppliers. The primary comparison of GPE 2024 to previous years in this and other areas will be by share of booths.

  • Natural – 201 Booths. The number of booths in this section is again at an all-time high. The share is down slightly from 2023 but +25% vs 2019. This reflects the strength of the natural trend in our whole society.
  • Boutique (Modern Pet) – 27 Booths. The booth share is even with 2023 but down 55% from 2019. Boutique is essentially the opposite of Natural and more discretionary in a country that is increasingly focused on “needs”.
  • Aquatic – 18 Booths. The popularity of this category stabilized but the booth share is down 56% from 2019.
  • 1st Time Exhibitors – 99 Booths. The share continues to trend down but most of the 328 exhibitors who didn’t exhibit at GPE (at least from 2019>2023) chose the regular floor or another special section. GPE is a “must do” for new companies and New – products and companies are a major focus of GPE.
  • Supplier – 47 Booths. The APPA added this section in response to the growing popularity of EOM products.
  • International – The big news is the foreign surge. There are 406 exhibitors (36%) from 35 countries outside the U.S at GPE 2024. GPE is truly GLOBAL!

There are large numbers of exhibitors in the “regular” floor space who would qualify for inclusion in these sections. You need to “work” the whole show to ensure that you get a full view of the product categories of interest to you. I will again be creating a GPE Exhibitor Visit Planner that allows attendees to plan their floor time by targeting the exhibitors with products of interest. The GPE 2024 SuperSearch will be made available by March 4th and be regularly updated with last minute changes. Now, let’s take a look at the results from this year’s research on exhibitors’ product offerings.

1st, we’ll Compare Exhibitor Types– By function: By Animal type (Numbers are based on booths assigned by 2/16/24)

Results were mostly negative as only 3 categories gained share from 2023.

  • Dogs Still Rule – They are up to 84.9% of all booths. 6 out of every 7 booths are selling dog products.
  • Cats had the biggest gain of any animal, now offered by 59.9% of exhibitors. Up from 40% back in 2014.
  • Fish/Aquatic – This category continues to lose share and is down 51% from 2017.
  • Other Animals – Horses were stable. All others lost share. The biggest drop was in Birds, -1.7%.
  • Business Services – Inflation continues to drive the popularity of private label/OEM products. The huge lift in count and share reflects the changing needs in the industry. BTW, there were only 8 exhibitors in 2014.
  • Distributors – Their share fell below 1% for the 1st The supply chain is shortening for many categories.
  • Gift/Gen Mdse – A big drop after a slight lift in 23. It has been generally declining since peaking at 7.8% in 2016.

Dogs and Cats are still the undisputed royalty of Pet. Because of their huge impact on the industry. I have divided the products designed for them into 33 subcategories. Let’s see how this year’s GPE Top Ten (by booth count) are doing.

All have more booths than 2023, but the ranking  changed for 7 – 3 up & 4 down, including the 1st change in the top 4 in years. The biggest share gain was by Toys, while Treats had the biggest loss.

  • Treats are still #1 although their share fell by -1.3%. Their priority is reflected in their frequency – 1 in 3 booths offers treats. Many supplements are in treat form and have helped maintain treats at the top.
  • Toys – With a big increase in booths, Toys moved up to #2. This is directly tied to the huge surge in Chinese companies. 246 exhibitors (21.7%) – 1 in 5 booths, are now based in China.
  • OTC Meds/Supplements/Devices – A slight gain in booths but a -1.1% drop in share. They are down 5.1% in share from their peak in 2022. However, in 2014, their share of boot was only 11%.
  • Collars, Leads & Harnesses – They held the #4 spot and their share has been stable since 2019 after falling from 22.1% in 2018. In 2016, they also had a 22.1% share which earned them the #2 ranking.
  • Feeding Acc. They held on to #5. Their share surged in 23 & held in 24 with the return of foreign exhibitors.
  • Food remains a priority as Pet Parents focus on nutrition, health and wellness. However, almost all is USA made.
  • Beds/Mats – Fell from #6 to #7. Their share has improved in 23 & 24 with the influx of Far East exhibitors.
  • Grooming Tools – They moved up from #10 to #8 and reached a record share. Once again, Chinese companies are a primary source for this product category.
  • Waste Pickup – They fell from #8 to #9 largely because of the huge surge by Grooming Tools.
  • Carriers/Crates – Fell from #9 to #10 but set a record share, due to the continued increase in Chinese exhibitors.

Pet Parents’ concern for the overall health and wellness of their “pet children” remains a big priority but the impact of strong Petflation has pushed the “value” of Private Label products to the forefront. Their EOM capabilities plus the end of travel restrictions has caused an unparalleled surge in foreign exhibitors. They now occupy over 400 booths (36%). In pre-pandemic 2019 they had 295 booths (25%). You first see the impact at the animal type level. In EOM, Dog & Cat are where the $ are and both reached a record booth share in 2024. Some product categories are also showing an elevation in share including Toys, Bowls/Feeders, Beds, Carrier/Crates and Grooming Tools.

The last chart details the specifics for all 33 of the Dog/Cat product categories that I defined. Of note: All the data inputs for this report and the SuperSearch tool come from a review of the GPE online exhibitor product listings AND visits to over 1300 websites. They’re not 100% accurate, but pretty close. Which categories are of interest to your business?

GPE 2024 is about innovation and fulfilling needs. There are products, services and education to fulfill every need and…want. There is also an abundance of “new” – both in products and the 260+ exhibitors who are new to Pet Industry shows. However, to reap the benefits, you need a plan. Exhibitors must showcase the “right” items. Attendees need to strategically analyze their data, determine what they need to improve their business and develop a plan to find the products to fulfill their needs. Then…execute the plan. If they do nothing else at GPE, attendees will have 1 minute and 10 seconds to spend at each booth. You definitely need a plan! The GPE 2024 SuperSearch will be available the week of March 4th. It can help. Try it out. Good luck in Orlando!

Petflation 2024 – January Update: Down to +4.7% vs Last Year

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Inflation slowed in January. The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec but turned up in January. However, the CPI actually decreased to +3.1% from +3.4% due to a big monthly price lift in 2023. Grocery inflation continues to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +1.2%, 11 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 4.7% in January, it is still 51.6% above the national rate of 3.1%. 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 24 vs 23 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (22>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • YTD comparisons (Since it is January, this month’s numbers are the YTD rate.)

In our first graph we will track the monthly change in prices for the 24 months from January 22 to January 24. 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 segment patterns and compare them to the overall U.S. CPI. The year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In January, Pet prices were up from last month as lifts in Services & Supplies overcame drops in Food & Veterinary.

In January 22, the cumulative CPI was +9.4% and Pet prices were +5.6%. 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. In November, all but Food & Vet fell. In December Supplies & Vet  drove Total Pet prices up. In January, Food & Vet prices fell while Supplies & especially Services prices surged. Note: With cumulative inflation, all but Supplies are now at or within 0.4% of their pricing peak.

  • 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, dipped in Oct>Dec then rose in Jan. but 30% of the 22.4% increase in the 49 months since December 19 happened in the 6 months from Jan>Jun 22 – 12.2% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. They have essentially stabilized at this record level. 93% of the 22.9% increase has occurred since 2021.
  • 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 in 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. They fell in March, peaked at a new record in May, then continued their rollercoaster ride with lifts in Dec>Jan.
  • Pet Services– Normally inflation is 2+%. Perhaps due to closures, the rate slowed in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. It was stronger in 2022 but it got on a rollercoaster in Mar>Jun. It turned up again Jul>Mar 23 but the increase slowed in April. Prices fell -0.3% in May, turned up Jun>Aug, fell in Sep>Dec. then surged to a new record high in January.
  • 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 even with dips, they have stayed above the CPI since July 22. In 23 prices grew Jan>May, stabilized Jun>Jul, fell in Aug, grew Sep>Dec (Record high) then fell in January.
  • Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, fell in Nov then grew in Dec>Jan to a new record high. The January lift came from Services (+5.6%) and Supplies (+0.7%) which overcame drops in Food & Vet. However, the YOY CPI fell from 5.1% to 4.7%.

Now, we’ll turn our attention to the Year Over Year inflation rate change for January and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation slowed to 4.7%, down from 5.1% in December but it is still 1.5 times higher than the National rate. The chart will allow you to compare the inflation rates of 23>24 to other years but also see how much of the total inflation since 2019 came from the current pricing surge which took off in 2022. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.5% from December but were +3.1% vs January 23, down from +3.4% last month. Grocery inflation is down again, to +1.2% from +1.3%. 7 of 9 categories had a price increase from last month – only Vet & Pet Food prices fell. There were 5 increases in December. Pet Services had a big turnaround. After 4 monthly drops, prices rose 5.6%. The national YOY monthly CPI rate of 3.1% is only 48% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Veterinary Services. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 2 segments – Medical Services & Haircuts – both Services categories. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 95.6% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +4.9% while the CPI for Commodities is +0.1%. Services are driving virtually all of the current 3.1% inflation.

  • U.S. CPI– Prices are +0.5% from December. The YOY increase is 3.1%, down from 3.4%. It peaked at +9.1% in June 2022. The targeted inflation rate is <2% so we are still 55% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 2 lifts – not good news! The current rate is 52% below 22>23 but the 21>24 rate is still 17.9%. That is 79.6% of the total inflation since 2019. Inflation was very low in early 2021.
  • Pet Food– Prices are -0.1% vs December and +4.8% vs January 23, down from 5.1%. However, they are still 4 times the Food at Home inflation rate. The YOY increase of 4.8% is being measured against a time when prices were 17.3% above the 2019 level, but that increase is still 4 times the pre-pandemic 1.2% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 90.2% of the total 26.5% (Now: 2nd highest) inflation since 2019.
  • Food at Home – Prices are up +0.7% from December, but the monthly YOY increase is 1.2%, down from 1.3% last month and radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.4% Inflation for this category since 2019 is 17% more than the national CPI and is in 3rd place behind Vet & Pet Food. 79.5% of the inflation since 2019 occurred from 2021>24. This mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>21 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 0.7% from December and 0.5% vs January 2023. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 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, grew in Sep>Oct, fell in November, then grew sharply in Dec>Jan.
  • Veterinary Services – Prices are -0.1% from December, but they are +9.6% from 2023, again the highest rate in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 36.5% compared to Pet Food, 26.5% and Groceries, 26.4%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 68% of the cumulative inflation since 2019 occurred from 2021>24.
  • 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 1.0% from December and after 8 straight months of deflation are now +0.6% vs last year. Medical Services are not a big part of the current surge as only 42% of the 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. January 24 prices surged, +5.6% from December and were +4.8% vs last year, a big change from +0.7% last month, but well below the 8.0% back in March. Now, 77% of their total 2019>24 inflation has occurred since 2021. Last month it was only 49%.
  • Haircuts/Other Personal Services – Prices are +0.7% from December and +4.2% from 23, after 2 consecutive months below 4.0%. Inflation has been rather consistent as 59% of the inflation from 19>23 happened in 60% of the time.
  • Total Pet– Petflation is 56% lower than the 22>23 rate, but still 1.5 times the U.S. CPI. For January, +4.7% is the 4th highest rate since 1997 (2023: 10.6%; 2009: 10.3%; 2008: 5.2%). Vs December, prices fell -0.1% for Pet Food & Veterinary Services but grew strongly in Non-Vet Services, +5.6% and Supplies, +0.7% so Total Pet was +0.4%. A Dec>Jan price increase has happened 9 straight times and in 25 of the last 27 years with an average lift of 0.4%. In terms of Petflation, 2024 started just as we should have expected. Veterinary & Food are still the Petflation leaders, but all segments have an influence. Pet Food has largely been immune to inflation as Pet Parents are used to paying a lot, but inflation can reduce purchase frequency in the other segments.

Petflation is slowing, but it is still strong, with the 4th highest rate for January and 2023 had the 2nd highest annual rate in history. It is also 1.5 times the National CPI. In 2021 it was only 75% of that rate. Even if it slows to 0%, you can’t ignore the fact that inflation is cumulative. Pet prices are 20.9% above 2021 and 26.1% higher than 2019. Those are big lifts. Since price/value is the biggest driver in consumer spending it is likely to affect the Pet Industry. The Non-Vet Services segment will be the least impacted as it is the most driven by high income CUs. Supplies and Veterinary will likely see a reduction in purchase frequency. Food is the most needed segment so the response will be complex. It could include a movement to online shopping, switching to private label or even downgrading the quality of food.

In fact, one impact of high cumulative inflation will be very visible soon at the industry’s preeminent trade show, Global Pet Expo 2024. There are over 1100 exhibitors with 120+ actively soliciting OEM (Private Label) customers. Because many have expertise in OEM this private label trend has caused a record surge in Foreign Exhibitors, 36% of all booths including 250 from China. Inflation has further enhanced  the importance of “Value” to consumers.