Petflation 2024 – May Update: Slows to +1.6% vs 2023

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, then turned up Jan>May 24. However, the CPI slowed in May to +3.3% from +3.4% in April. Grocery prices fell slightly, -0.01% from April and inflation slowed to 1.0% from 1.1%. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 15 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 22, but at 1.6% in May, it is -51.5% below the national rate, a big change from +52% in January. We will look deeper into the data. 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 May 22 to May 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 May, Pet prices were up 0.1% from April. All but Food were up, with Services leading the way, +1.5%.

In May 22, the CPI was +13.7% and Pet prices were +10.5%. 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 consistently grew 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 Jun/Jul this 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. In April, prices in all but Vet fell. In May, all but Food grew.

  • 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 23, dipped in Oct>Dec, then rose Jan>May 24, but 31% of the 22.2% increase in the 53 months since Dec 2019 happened from Jan>Jun 2022 – 11.3% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up & peaked in May 23. In Jun>Aug they fell, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell Apr>May. 97% of the 22.0% 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 with Dec>Feb lifts, Mar/Apr drops & a May lift.
  • Pet Services– Inflation is usually 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but with fewer outlets. Inflation grew in 21 with the biggest lift in Jan>Apr. Inflation was stronger in 22 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 Jun>Aug, fell Sep>Dec, rose Jan>Mar, fell in Apr and rose in May.
  • 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 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>May.
  • 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 fell in April then rose in May, but Petflation is again about half of the National CPI.

Next, we’ll turn our attention to the Year Over Year inflation rate change for May 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 1.6%, down from 1.7% in April. It is again 50% below 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 +0.2% from April but were +3.3% vs May 23, down from +3.4% last month because there was a bigger Apr>May price lift in 23. Grocery inflation also fell slightly to +1.0% from +1.1%. Only Pet Food & Groceries had a price decrease from last month. There were 4 drops in April – all Pet. The national YOY monthly CPI rate of 3.3% is down from 3.4% and 83% of the 22>23 rate but only 38% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Medical & Pet 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 102% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.2% while the CPI for Commodities is +0.1%. This clearly shows that Services are driving almost all of the current 3.3% inflation rate.

  • U.S. CPI– Prices are +0.2% from April. The YOY increase is 3.3%, down from 3.4%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 65+% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 of 6 with drops – still not good! The current rate is 17% below 22>23 but the 21>24 rate is still 16.7%, 73.9% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are -0.1% vs April and -1.1% vs May 23, down from -0.1%. Now, they are significantly below the Food at Home inflation rate, +1.0%. The YOY drop of -1.1% is being measured against a time when prices were 23.3% above the 2019 level and the current decrease is still below the -0.01% drop from 2020 to 2021. The 2021>2024 inflation surge has generated 99.1% of the total 23.0% inflation since 2019.
  • Food at Home – Prices are down -0.01% from April and the monthly YOY increase is 1.0%, down from 1.1%. It is radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.2% Inflation for this category since 2019 is 16% more than the national CPI but still in 4th place behind 3 Services expenditures. 74.8% 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 0.6% from April but are -1.0% vs May 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, rose in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again in Dec>Feb, fell in Mar>Apr, then rose in May.
  • Veterinary Services– Prices are +0.3% from April and +7.6% from 2023, still the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +39.6% and since 2021, +28.2%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 22 & 23. It is still high in 24, so 71.2% 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 0.3% from April, and they are +3.1% vs last year. Medical Services are not a big part of the current surge as only 47% 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 surged Jan>Mar dropped in April then rose to a record high in May, +6.4% vs 23. Inflation peaked at +8.0% back in March 23. Now, 70% 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 +0.2% from April and +4.8% from 23. 3 of the last 5 months have been 4.0+%. Inflation has slowed but has been pretty consistent. 62% of the 19>24 inflation happened 21>24.
  • Total Pet– Petflation slowed to 1.6% from 1.7% in April and is 85% less than the 22>23 rate and 52% less than the U.S. CPI. For May, 1.6% is 48% below the 3.1% average rate since 1997. Vs April, prices grew 0.1% as all but Food had increases. Services led the way with +1.5%. An Apr>May price increase has happened in 22 of the last 27 years, so this month’s data was not surprising. In terms of Petflation, 2024 appears to be returning to a more normal pattern. However, the path to get there may be unusual and there is still a ways to go.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – All Pet – Pet Food, Services, Veterinary & Total Pet. The 23>24 rate is usually much lower than 22>23 for all but Medical Services. 21>22 still has the highest rate for Food at Home, the 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 (2.2%). It comes as no surprise that Veterinary Services has the highest average rate (6.7%), but all 5 other categories are +4.5% or higher.

  • U.S. CPI – The 23>24 rate is 3.3%, the same as April, but down 38% from 22>23 and 60% less than 21>22. It is also 21% below the average YOY increase from 2019>2024, but it’s still 63% more than the average annual increase from 2018>2021. 78% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 1.6%, down from 2.2% in April and 89% less than the 22>23 rate. Now, it is also 72% lower than 21>22 and 14% below 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. 94% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down over 87% from 22>23 & 21>22 and 56% from 20>21. Also, it is even 33% lower than the average rate from 2018>20. It remains in 3rd place 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 78% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased Jan>Feb, fell Mar>Apr then rose in May. The 2024 inflation rate of 0.1% is only higher than the -1.6% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 7.0% in 22 & 5.5% in 23. The 2021 deflation created a unique situation. Prices are up 11.4% from 2019 but 114% of this increase happened from 2021>24. Prices are up 13.0% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. The rate may have peaked in 2023, but it is still going strong at the start of 2024, +8.3%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.7%, they have the highest average annual inflation rate since 2019. It is 1.6 times higher than the National Average but 2.4 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 1.9%. In a non-pandemic year, “normal” is 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 surged in 2024,except for a drop in April. The Ytd 23>24 inflation rate of 5.1% is 2nd to Veterinary in the Pet Industry. It is 29% less than 22>23 and 16% 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 4.3%, which is 23% below the 20>21 peak but 39% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 3.0%, down from 3.4%. It is 71% less than 22>23 but 32% higher than the 2018>21 average rate. However, it is now 9% below the CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food inflation rates but Supplies inflation is also slowing. Services and Veterinary prices both reached record highs in May, but it was not enough to overcome the YOY monthly deflation in products.

Petflation is definitely slowing. May was 66% below the average for the month and 52% lower than the National CPI. This is about the same as it was back In 2021. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.2% above 2021 and 25.6% higher than 2019. Those are big lifts. In fact, in May prices for Vet & Serv set new records. Total Pet is only 0.1% below the highest in history. Food prices are 1.1% below their peak and Supplies prices are 1.0% lower. Only Supplies prices (+10.3%) are less than 23% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. 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 evidence of this at GPE 24 where a record number of exhibitors offered OEM services. Strong, cumulative inflation has a widespread impact.

U.S. PET FOOD SPENDING $40.86B (↑$4.51B): MID-YEAR 2023 UPDATE

The pandemic had a huge impact on Pet Food spending and the binge/bust was very visible. Recent strong inflation is also very impactful but is less visible. At Mid-year 2023, the strong $ growth that began in the 2nd half of 2021 continued. Pet Food Spending for the 12 months ending June 30, 2023 was $40.86B, up $4.51B (+12.4%) from a year ago. Let’s put that into proper perspective. In pre-pandemic, Mid-2019 Pet Food spending was $28.90B. That means that the average annual growth rate from 2019>23 is +9.1%. This is 62% higher than the average growth rate of +5.6% from 1984 to 2019. In the topline numbers, this industry segment is doing well. However, a new challenge began in 2022 – radically high inflation in Pet Food prices. Here’s what it was in mid-year 2023:

  • Mid-yr 23 vs 22: +14.1%
  • 2nd Half 22 vs 21: +14.0%
  • 1st Half 23 vs 22: +14.2%

Strong inflation began in 2022. It hit 10+% in June 2022 and prices reached a record high in May 2023. Prices have stabilized but are still within 1% of the peak. Traditionally, “normal” inflation increases have had little impact on Pet Food spending. However, the current increases are historic. While the 2024 inflation rate is now very low, high prices can affect Pet Parents’ buying behavior. We’ll get more evidence of any ongoing cumulative impact when the 2023 yearend Pet Food spending numbers are released  in early September.

If inflation was 14.1% for Mid-Yr 2023, then the 12.4% increase in Pet Food spending was really a -1.7% drop in sales. Consumers didn’t buy less. The drop came from a mixture of downgrading, moving to private label and value shopping.

Now, let’s get started with our Pet Food spending update for Mid-Year 2023. Pet Food (& Treat) Spending for the 12 months ending 6/30/23 was $40.86B, up +$4.51B (+12.4%). The following charts and observations were prepared from calculations based upon data from the current CEX report and earlier ones. The first chart will help put the current numbers into historical perspective and truly show you the recent change in the roller coaster ride of Pet Food Spending.

Here are the current numbers:

Mid-Yr 2023: $40.86B; $4.51B (+12.4%) from Mid-Yr 2022. The net gain of $4.51B came from:

  ◦  Jul>Dec 2022: Up $2.34B from 2021.            Jan>Jun 2023: Up $2.17B from 2022.

Historical research has shown that Pet Food spending has been on a roller coaster since 2000, generally with 2 years up, followed by a flat or even declining year. This up and down “ride” was primarily driven by a succession of Food trends like Made in the USA, Natural and Super Premium”. The 2 yrs up then 1 yr flat/down pattern has been broken on a couple of occasions due to outside influences – the FDA grain free warning in 2018 and the COVID pandemic in 2020. We may see another major influence on spending – skyrocketing inflation. Right now, we’re seeing strong, consistent growth but it is primarily due to higher prices. We’ll see what happens, but the Pet Food spending rollercoaster ride is likely to continue in some form.

2013 was definitely a game changer for this segment as it began an extended period of deflation which continued through 2018. Midway through 2018, Pet Food prices were still 2.3% lower than in 2013. The spending drops in 2013 and 2016 were driven by pet parents value shopping for their recently upgraded pet food. As it turns out, 2014 brought out yet another new factor in Pet Food spending.

For over 30 years Baby Boomers were the leaders in Pet Food, both in spending and in adopting new products. Even in 2023, they still spend the most, but it turns out that the 25>34 yr-old Millennials led the movement to Super Premium in late 2014. The older groups, especially Boomers followed in 2015 and spending rose $5.4B. At the same time, the Pet Food spending of the 25>34 yr olds dropped. At first, we thought they had rolled back their upgrade. However, it turns out that they were leading the way in another element of the trend to Super Premium – value shopping. The Boomers once again followed their lead and spending fell -$2.99B in 2016. The Super Premium upgrade movement had 3 stages:

  1. Trial – The consumer considers the benefits vs the high price and decides to try it out. Usually from a retail outlet.
  2. Commitment – After a period of time, the consumer is satisfied and is committed to the food.
  3. Value Shop – After commitment, the “driver” is to find a cheaper price! – The Internet, Mass Market, Private label.

This brought us to 2017. Time for a new “must have” trend. That didn’t happen but competitive pricing brought about another change. Recent food trends have been driven by higher income and higher education groups. However, the “value” of Super Premium was established and now more “available”. Blue Collar workers led a new wave of spending, +$4.6B, as Super Premium penetrated the market more deeply. 2018 started off slowly, +$0.25B. Then came the FDA warning on grain free dog food. Many of the recent Super Premium converts rolled back their upgrade and spending fell -$2.51B. This decrease broke a 20 year spending pattern. In the 1st half of 2019, Pet Food spending remained stable at the new lower level. In the second half of 2019 we started to see a recovery from the overreaction to the FDA warning and spending increased by $2.3B. Then came 2020. The recovery was continuing but a new outside influence was added  – the COVID-19 pandemic. In March nonessential businesses were closed. This also produced a wave of panic buying in some truly essential product categories. In the Pet Industry there is only 1 truly essential category – Pet Food. Coupled with the FDA “recovery” and the ongoing movement to Super Premium, this produced an incredible $6.76B lift in Pet Food Spending in the 1st half of 2020. Spending fell in the 2nd half of 2020 and plummeted in the 1st half of 2021. Pet Parents didn’t binge again, and some began using up the stockpile that they panic bought in the early days of COVID. In the 2nd half of 2021, the up/down impact of COVID was essentially over. Pet Parents were still committed to their children’s health which included Super Premium Foods and Medical Supplements, often in treat form. The internet also made this quality choice accessible to more households, so Pet Food spending increased both in the 2nd half of 21 and the 1st half of 22. In 2022, strong inflation began. Prices peaked in May 2023 but remained high. Sales had strong growth in both the 2nd half of 22 and the 1st half of 23. However, inflation drove 100+% of the lift as there was a “real” -1.4% drop in Pet Food Sales. Strong inflation has stopped but prices remain within 1% of the peak. We’ll see what happens.

Let’s look at Pet Food spending by the 2 most popular demographic measures – income & age group. They both show the current and previous 12 months $ as well as 2022 yearend. This will allow you to track the spending changes between halves. The first graph is Income, which has been shown to be the single most important factor in increased Pet Spending and its influence continues to grow.

Here’s how you get the change for each half of the 22>23 mid-yr numbers using the over $100K group as an example:

  • $100K> Mid-yr Total Spending Change: $20.45B – $16.36B = Up $4.09B (green outline = increase; red outline = decrease)
    • 2nd half of 2022: Subtract Mid-22 ($16.36) from Total 2022 ($17.60B) = Spending was up $1.24B in 2nd half of 2022.
    • 1st half of 2022: Subtract Total 2022 ($17.60B) from Mid-23 ($20.45B) = Spending was up $2.85B in 1st half of 2023.
  • Spending was mixed for the year in the smaller segments but there were basically 3 different patterns in the individual groups. #1. $150K>, $100>149K & <$30K spent more in both halves. #2. $30>49K & $50>69K spent less in the 1st half of 2023. #3. $70>99K spent less in both halves. Note: The very price sensitive groups from $30K to $99K all had spending drops when inflation peaked in the 1st half of 2023.
  • Perhaps the most obvious fact is the continued spending disparity due to income. Back in 2014, prior to the big lift due to Super Premium, $70K was the “halfway point” in Pet Food spending. The under $70K group accounted for 66.7% of CUs and 51.1% of Pet Food spending. They lost the lead in 2015 as $70K> spent 50.8% of Pet Food $. In 2020, the binge buying of Pet Food by $100>150K pushed the $100K> group to the top at 55.1%. Then the big drop in 2021 flipped $70K> back into the lead at 60.8%. High inflation has caused another flip as $100K> is back on top with over 50.0%. The halfway point in Pet Food spending grew from $91K to $100K, the 2nd highest in history.
  • < $70K > The Pet Food spending patterns of these big groups changed in 2023. The Fall 2022 lift is larger for <$70K. However, that changed in 2023 when their sales fell while $70K> $ spiked. The impact of Higher Inflation on most lower incomes is very apparent in this big group.
  • < $100K > The spending patterns of these 2 groups closely mirrors the Under/Over $70K pattern except that the Fall 2022 spending lift for the $100K> group was slightly larger than for <$100K. The Total Spring 2023 lift came from the lowest and highest income groups, but with a $2.85B lift, $100K> was the primary driver.
  • <$30K With a lift in the Fall and an even bigger increase in the Spring, spending for this lowest income group grew 31.2%, over twice the inflation rate. They obviously have a strong commitment to the health of their pet children.
  • $30>49K – This low-income group includes many Retirees. They are definitely committed to their pets, but their timing often lags behind other groups. The drop in 2023 was probably due to value shopping after their big 2022 lift.
  • $50>69K – This low-income group was hit hard by the pandemic. With strong growth in the 2nd half of 2022 and only a minor drop in 2023, their Pet Food spending is again above pre-pandemic 2019.
  • $70>99K –This middle-income group was the most negatively affected by the pandemic. However, they fully recovered in 2021. Spending flattened in early 2022, then dropped in the 2nd half and 1st half of 2023. They are very value conscious. The skyrocketing inflation in late 2022 and early 2023 obviously affected their Pet Food spending.
  • $100K>149K – High income is increasingly becoming “where it’s at” in Pet Spending. This group led the way in Pet Food binge buying and the subsequent drop. Sales grew in both halves but 57% of the lift was due to inflation.
  • $150K > Their Pet Food spending also fell in 2020, likely due to value shopping on the internet. They came back strong in 2021, Their pattern is similar to $100>149K but with a bigger lift in 2023. 53% of the lift was from inflation.

Now let’s look at Pet Food spending by Age Group.

  • <25 & 75> yr olds had spending drops from 2022. All other groups spent more.
  • <25 – After a huge increase in 2022, their spending fell -30%, but it’s still $1B. Most of the drop occurred in the 1st half of 2023 when prices peaked. It’s likely mostly due to downgrades, switching to private label & value shopping.
  • 25>34 – Up $1.42B, a strong rebound from last year’s -$1.35B drop. This group, especially those with families, are under a lot of financial pressure. They ignored it and spent 34% more. Only 41% of the lift was from inflation.
  • 35 > 44 – Spending grew overall but fell in 2023 likely because high prices intensified value shopping. They are 2nd in income and their spending has smaller fluctuations. They are again above $6B at mid-year but broke $7B in 2022.
  • 45 > 54 and – They have the highest income, so an annual up/down spending pattern is not expected. Their Pet Food $ dropped throughout 2020 but it has increased in every half since then. In 2023, it is now above the previous peak of $7.09B in 2019. The money is definitely there but 54% of the lift came from inflation.
  • 55>64 – This group is still mostly Boomers, the most emotional Pet Parents. In 2020 they led the way in Pet Food binge buying. They also had the biggest 2021 drop. With growth in both halves for 2 consecutive years, including a $1.5B lift in mid-2023 they are now 33% ahead of their pre-pandemic 2019 spending level.
  • 65 > 74– This group is all Boomers but with lower income. Spending grew slightly in both halves. They are committed to their pets. Even though the members change, they are the only age group with steady annual growth since 2016.
  • 75> – In 2021 they upgraded. Spending plummeted in the 2nd half of 22 then grew in 23 but was negative for mid-yr.

That gives us the “big picture” for our 2023 Mid-year update of Pet Food spending. Now we’ll take a closer look at the start of 2023. We’ll compare it to the 1st half of 2022 and document the biggest $ changes since then.

  • The biggest increases are much larger than the biggest decreases in all categories. In 4 categories – # Earners, Race/Ethnic, Housing and Area, all segments spent more in 2023 than in 2022.
  • There are a number of usual winners, $150K>, White, Not Hisp., Adv College Degrees, Boomers and Homeowners w/Mtges. There are also some surprises like Retirees, 2+ Unmarried Adults, No Earner in 2+CUs and 25>34 yr-olds.
  • When we look at the losers, we also see some familiar names, $30>49K, Gen Z, No Earner Single and Center City. However, there are 2 big surprises – Self-employed and 35>44 yr olds.
  • Pet Food spending in the 1st half of 2023 was $2.17B ahead of the 1st half of 2022 but $5.61B ahead of 2019. In fact, 66 of 82 demographic segments (80%) spent more in 2022 than in 2021. The widespread growth continues.

The spending lift was large in the 1st half, but not unexpected. After the huge drop in Pet Food $ in the 1st half of 2021 following the buying binge in 2020, we’ve had 4 consecutive halves with strong growth. The pandemic roller coaster ended in 2021 and we now appear to be on a path of consistent growth. Pet Food spending in mid-yr 2023 was $40.86B. This is $2.9B above the binge peak of $37.96B in mid-2020 and $11.96B more than the $28.90 in pre-pandemic mid-yr 2019. If we ignore the pandemic turmoil, then Pet Food spending has grown 41.5% in 4 years. That’s an annual growth rate of +9.1%, which is 62% higher than the +5.6% rate from 1984 to 2019. That’s real proof that the Pet Food segment is back and doing even better than usual. Unfortunately, a new challenge has risen and may have driven most of the strong growth – runaway inflation. It started slowly at the end of 2021, then continued to grow in 2022, hitting 10+% in June 2022. Prices peaked in May 2023 but are still high. Past periods of Pet Food inflation just caused Pet Parents to spend more. Pets must have food. However, this price increase is at record levels. We should note that the pandemic is also a factor in inflation because supply chain issues related to COVID had a big impact on prices. Overall inflation has lessened and dropped in Pet Food in 2024. All pet spending has been moving towards higher incomes. Households with a lot of financial pressure could cut back on more discretionary pet spending, reduce purchase frequency, and even downgrade their pet food. We see evidence of inflation’s negative impact on Pet Food in early 2023 as the 12.4% lift was really a -1.7% drop. We’ll see what happens in the 2nd half of 2023 when get the 2023 data in September