Petflation 2025 – March Update: Plummets to +1.3% vs Last Year

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The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until it turned up in Jul/Aug 2023. Prices fell in Oct>Dec 23, then turned up Jan>Oct 24 but fell -0.1% in Nov. However, they have now risen for 4 straight months, including a 0.2% lift in March to a new record high. However, the CPI vs 2024 fell to +2.4% from +2.8% in February. Grocery prices rose 0.5% from February and YOY inflation rose from 1.9% to 2.4%, the 1st time that it has been over 2.0% since Oct 23. 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 Dec 21 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 22. National inflation has slowed considerably since then, but Petflation generally increased until June 23. It passed the CPI in July 22 but fell below it from Apr>Jul 24. It exceeded the CPI in August, fell below in Sep>Oct, rose above in Nov, then fell below in Dec>Mar 25. As we drill into the data, all 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 25 vs 24 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (23>24, 22>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2025 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2025
  • 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 Mar 23 to Mar 25. 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 from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In Mar, Pet prices were down -0.1% from Feb. Food (-0.5%) & Services (-0.1%) were down while Vet (+0.5%) & Supplies (+0.1%) were up.

In Mar 23, the CPI was +17.5% and Pet was +19.4%. The Services segments inflated after mid-20, while Product inflation stayed low until late 21. In 22, Food prices grew but the others had mixed patterns until July 22, when all rose. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food inflated while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month for all segments except for 1 Supplies dip. In May Product prices grew while Services slowed. In Jun/Jul this reversed. In Aug all but Services fell. In Sep/Oct this flipped. In Nov, all but Food & Vet fell. In Dec, Supp. & Vet  drove prices up. In Jan>Mar 24 prices grew. In April, prices in all but Vet fell. In May, all but Food grew. In June, Products drove a lift. In July, all but Services fell. In Aug, Food drove a drop. In Sep, Products fueled a drop. Services drove a lift in Oct. In Nov, all were up. In Dec & now Mar 25, Total Pet fell slightly. after hitting a record high in Feb.

  • 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 rose Jan>Sep 23, fell Oct>Dec, rose Jan>Oct 24, fell Nov, then rose Dec>Mar to a record high but 27.9% of the increase since Dec 19 happened from Jan>Jun 22 – 9.5% of the time.
  • Pet Food – Prices were at the Dec 19 level Apr 20>Sep 21. They grew & peaked May 23. Jun>Aug ↓, Sep>Nov↑, Dec>Feb 24↓, Mar↑, Apr>May↓, June↑, Jul>Oct↓, Nov↑, Dec↓, Jan>Feb 25↑, Mar↓. 99% of the lift was in 22/23.
  • Pet Supplies – Supplies prices were high in Dec 19 due to tariffs. They had a deflated rollercoaster ride until mid-21 when they returned to Dec 19 prices & essentially stayed there until 22. They turned up in Jan and hit a record high. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct to 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. The rollercoaster continued with Dec>Feb 24↑, Mar/Apr↓, May/Jun↑, July↓, Aug↑, Sep/Oct↓ & Nov/Dec↑, Jan>Feb 25↓, Mar↑.
  • 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 strong in 22 but prices got on a rollercoaster in Mar>Jun. They turned up Jul>Mar 23 but the rate slowed in April and prices fell in May. Jun>Aug↑, Sep>Dec↓, Jan>Mar 24↑, Apr↓, May↑, June↓, Jul>Nov↑, Dec>Mar 25↓.
  • 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>24 prices grew Jan>May, leveled Jun/Jul, fell Aug, grew Sep>Dec, fell Jan 24, grew Feb>May, fell Jun>Jul, grew Aug>Mar 25
  • 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 Sep/Oct, then fell in Nov. In December prices turned up and grew through Mar 24 to a record high. Prices fell in April, rose May>Jun (record), fell Jul>Sep, rose Oct>Nov, fell in Dec, rose Jan>Feb 25 (record), then fell in March.

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>25 & 19>25. Petflation fell from 2.4% to 1.3% and it is now significantly below the National inflation rate (by -45.8%). The chart will allow you to compare the inflation rates of 24>25 to 23>24 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 up 0.2% from February and were +2.4% vs Mar 24, down from +2.8% last month. Grocery inflation rose to 2.4%, up from 1.9%. 3 had price decreases from last month, up from 2 in Jan/Feb. All were Pet: Supplies, Services & Total. There were 2 drops in Oct/Nov but 3 in Aug/Sep/Dec and 5 in July. The national YOY monthly CPI rate of 2.4% is down from 2.8% and is 31.4% below the 23>24 rate and 72% less than 21>22. The 24>25 rate is above 23>24 for 3 – Groceries, Medical Services & Haircuts. In our 2021>2025 measurement you also can see that over 75% of the cumulative inflation since 2019 has occurred in 6 segments, 4 are Pet – all but Services, plus Groceries & the CPI. Except for Pet & Vet Services, where prices have surged, 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>25 inflation surge provided 99% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures account for 63.8% of the National CPI so they are very influential. Their current CPI is +3.7% while the CPI for Commodities is 0.05%. This clearly shows that Services are driving almost all of the current 2.4% inflation. The situation in Pet is even worse. Petflation is currently 1.3%. The combined CPI for the 2 Service Segments is 4.7%, while the Pet Products CPI is -1.2%.

  • U.S. CPI– Prices are +0.2% from Feb. The YOY increase is 2.4%, down from 2.8%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 20+% higher than the target. The Feb/Mar drops  follow 4 straight lifts after 6 consecutive drops from Apr>Sep. The current rate is below 23>24 but the 21>25 rate is still +20.7%, 80.2% of the total inflation since 2019. The Inflation surge was just starting in March 2021, +2.6%
  • Pet Food– Prices are -0.5% vs Feb and -0.9% vs Mar 24, a big change from +0.4% in February. They are even farther below the Food at Home inflation rate of +2.4%. The YOY Pet Food CPI has now deflated in 12 of the last 13 months. The 2021>2025 inflation surge has generated 93.3% of the 23.8% inflation since 2019. Inflation began for Pet Food in June 2021, +0.9%, after 12 straight deflationary months.
  • Food at Home – Prices are up +0.5% from Feb, and the YOY increase rose to 2.4% from 1.9%. This is still radically lower than Jul>Sep 2022 when it exceeded 13%. The 29.0% Inflation for this category since 2019 is 12% more than the national CPI but only in 4th place behind 3 Services expenditures (2 Pet). 81.0% of the inflation since 2019 occurred from 2021>25. This is about the same as the 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 surge.
  • Pets & Supplies– Prices were +0.1 from February and deflation slowed to -0.6% from -1.0%. They still have the lowest rate vs 2019. Prices were deflated for much of 20>21. As a result, the 2021>25 inflation surge accounted for 115% of the total price increase since 2019. Prices set a record in October 2022 then deflated. 3 increases pushed them to a record high in Feb 23. Prices fell in March, rose Apr/May, fell Jun>Aug, grew Sep>Oct, fell Nov, grew Dec>Feb, fell Mar/Apr, rose May>Jun (record), fell July, rose Aug, fell Sep/Oct, rose Nov/Dec, fell Jan/Feb, rose Mar.
  • Veterinary Services– Prices are +0.5% from Feb but their YOY CPI vs 24 fell to +5.9% from +8.1%. They are #1 in inflation vs 24 and still the leader since 2019 with +47.3% and since 2021, +36.3%. For Veterinary, high annual inflation is the norm. However, the rate has increased during the current surge, especially since 23. They have the highest rate in 25, and now 77% of the cumulative inflation since 2019 occurred from 2021>25.
  • 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 rose +0.6% from Feb, but inflation vs last year was stable at +3.0%. Medical Services are not a big part of the current surge as only 50.5% of the 18.6%, 2019>25 increase happened from 21>25.
  • Pet Services – Inflation slowed in 2020 but began to grow in 21. In 24 prices surged Jan>Mar, fell in April, rose in May, fell in June, rose Jul>Nov, then fell in Dec>Feb 25. Their rate has plummeted from 11.5% in Dec to 3.9% and they are only #3 in YOY inflation vs 24. 71.7% of their total 19>25 inflation is from 21>25. In Dec 23, it was 49%.
  • Haircuts/Other Personal Services – Prices are +0.1% from Feb and +4.7% from Mar 24. 13 of the last 15 months have been 4.0+%. Inflation has been pretty consistent. 64.0% of the 19>25 inflation happened 21>25.
  • Total Pet– Petflation fell to 1.3% from 2.4%. All segments but Supplies had a lower rate but they are actually deflating. It is 66% less than the 23>24 rate and 46% below the U.S. CPI. Plus, 1.3% is 58% below the 3.1% average March rate since 1997. March prices fell -0.1%, primarily driven by Food. A Feb>Mar decrease has happened only 5 times since 1997 (avg Chge: +0.3%). Another big factor in the CPI drop was that prices rose 1.0% in Feb>Mar 24. (3.3 times the avg chge) After a February pause, the long recovery appears to have restarted.

Now, let’s look at the YTD numbers.

The 24>25 rate is lower than 23>24 for all but Medical Services, Groceries & Haircuts. The 22>23 inflation rate was the highest for Groceries and all pet categories but Supplies & Vet. 21>22 has the highest rate for Pet Supplies and the National CPI. The average national inflation in the 6 years since 2019 is 3.9%. Only 3 of the categories are below that rate – Medical Services (2.8%), Pet Supplies (1.9%) and Pet Food (3.7%). It is no surprise that Veterinary Services has the highest average rate (6.6%), but all 4 other categories are +4.3% or higher.

  • U.S. CPI – The 24>25 rate is 2.7%, only down 16% from 23>24, but it is down 53% from 22>23, 66% less than 21>22 and 30.8% below the average increase from 2019>2025. However, it’s still 46% more than the average increase from 2018>2020. 81% of the 26.1% inflation since 2019 occurred from 2021>25. Inflation is a big problem that started recently.
  • Pet Food – Ytd prices are still deflated -0.5%, down from Feb, but up from -1.1% in Jan. That’s a big change from 3.0% in 23>24, 14.9% in 22>23 and the 2.0% 18>20 average. However, it is still higher than the -0.6% deflation in 20>21. Pet Food has the highest 22>23 rate but is only #5 in the 21>25 rates. Deflation in the 1st half of 2021 kept YTD prices low then they surged in 22 and especially in 23. 91% of the inflation since 2019 occurred from 2021>25.
  • Food at Home – The inflation rate is up from 23>24 but at 2.1%, it is down 79% from 22>23, 76% from 21>22 and 40% from 20>21. However, it is more than double the average rate from 2018>20. It is only in 4th place for the highest inflation since 2019 but still beat the U.S. CPI by 10%. You can see the impact of supply chain issues on the Grocery category as 81% of the inflation since 2019 occurred from 2021>25.
  • Pets & Pet Supplies – A true roller coaster, prices rose Jan>Feb 24, fell Mar>Apr, rose May>Jun, fell July, rose Aug, fell Sep>Oct, rose Nov>Dec, fell Jan>Feb, then rose Mar. Prices are deflating vs 24. Supplies have the lowest inflation since 2019. The biggest lifts since 2019 were in 22 & 23. The 2021 deflation created an unusual situation. Prices are up 11.7% from 2019 but 115% of this lift happened from 21>25. Prices are up 13.4% 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 in 2025, +6.9%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.6%, they have the highest average inflation rate since 2019. It is 1.7 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. In 2025 it is 2.9%, just slightly above the 2.8% 2019>25 average rate. However, it is being measured against 2024 when prices had the lowest inflation rate of any year at least since 2019.
  • Pet Services – After falling in late 2023, prices surged in 2024, then fell in 2025. The 24>25 inflation rate of 4.6% is 3rd, behind Veterinary & Haircuts on the chart. It is only their 4th highest rate but is 1.5 times higher than their 2018>21 average rate. Pet Services is 2nd in both 19>25 and 21>25 inflation.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. 2025 inflation is 4.7%, 18% below its 21 peak, but 45% above the 18>20 average. Consumers are paying over 30% more than in 2019, which usually reduces the purchase frequency.
  • Total Pet – 2025 Petflation is 1.9%, down from 2.2% in Feb and it is 28% less than 22>23. It’s even 16% lower than the 2018>21 avg rate. Plus, it is 30% below the CPI. Petflation is now at its lowest rate since the 1st quarter of 2021. This was primarily driven by deflation in Pet Products and lower inflation in Services. Veterinary continues to reach new record highs but all segments, but Supplies had lower YOY rates in March….and Supplies is still deflating.

The Petflation recovery paused in Aug, came back Sep>Oct, paused in Nov, then resumed in Dec>Jan, paused in Feb, then restarted in Mar. We tend to focus on monthly YOY inflation while ignoring one critical fact. Inflation is cumulative. Pet prices are 23.7% above 2021 and 28.3% higher than 2019. Those are big lifts. In fact, current prices for Vet are at a record high and the other segments are within 2% of the highest in history. Only Supplies prices (+11.5%) are less than 24.6% 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 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. At SZ 24 and GPE 24 & 25, a huge number of exhibitors actively offered their OEM services. Strong, cumulative inflation has a widespread impact.

 

Retail Channel $ Update – January Monthly & February Advance

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In February, YOY Commodities’ inflation slowed to 0.6% from 0.8%. Even with a low inflation rate, high cumulative inflation vs 21 can still impact consumer spending and slow $ales growth.  We saw more evidence of this in February. Total Retail $ were -0.9% vs 24, radically below the average 92>24 change of +4.9%. Relevant Retail was -0.2%, also far below the February average of +4.7%. The situation is complex, but the recovery has paused. We’ll continue to track the retail market with data from 2 reports provided by the Census Bureau and factor in a targeted CPI.

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 January Monthly Report and then go to the February Advance Report. Our focus is comparing to last year but also 21 & 19. We’ll show both actual and the “real” change in sales as we factor inflation into the data.

Both reports include the following:     (Note: January Monthly data = Ytd)

  • 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 January Monthly. All were down from December but there were no actual YOY sales drops. We should note: Gas Stations are selling less product than in 2021 & 2019. They are the only group not “all positive”. Relevant Retail has been all positive in 11 of the last 14 months and now in 7 of the last 8. ($ are Not Seasonally Adjusted)

The January Monthly is $2.4B less than the Advance report. Restaurants: -$1.3B; Auto: -$0.9B; Gas Stations: +$0.3B Relevant Retail: -$0.5B. Relevant Retail was the driver in the $ales decrease vs December, but all big groups were down. A Dec>Jan decrease in Total Retail  has happened every year since 1992. However, the -16.8% drop was 21% less than average. There were no YOY drops in actual sales for the first time since January 2023. There were 2 “real” sales drops, the same as November, but all but Gas Stations were “all positive”. Restaurants still have the biggest increases vs 21 & 19 but Relevant Retail stayed at the top of “real” performance vs 2019. However, only 55% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in January (82% of Jan Rel Retl $)

Overall– All 11 were down from December. Vs Jan 24, 10 were actually and “really” up. Vs Jan 21, 10 were up but only 6 were real increases. Vs 2019, Only Off/Gift/Souv were actually & really down, but HomeCtr/Hdwe were also really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 32.1% since 2019. Prices for the Bldg/Matl group have inflated 19.6% from 21 and 22.1% from 2019 which is having an impact. Sales vs December were -10.8% for HomeCtr/Hdwe and -14.1% for Farm Stores. Vs other years, all actual $ are up for both. HomeCtr/Hdwe are really down vs 21 & 19, but Farm stores are only really down vs 21. However, only 6% of the Building Materials group’s 19>25 lift was real. Avg 19>25 Growth: HomeCtr/Hdwe: 3.4%, Real: -0.01%; Farm: 5.0%, Real: 1.6%
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. In terms of inflation, the Grocery rate is now 17% lower than the rate for Drug/Med products. Drug Stores are positive in all measurements and 64% of their 2019>25 growth is real. Supermarkets’ actual $ are up in all measurements and they are only “really” down vs 2021. However, only 10.5% of their 19>25 increase is real growth. Avg 19>25 Growth: Supermarkets: +4.9%, Real: +0.6%; Drug Stores: +4.8%, Real: +3.2%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -45% from December, and their only positives are vs 2019. Prices are still deflating, -3.8% vs 24. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. The result is that 73.5% of their 41.2% lift since 2019 is real. Avg 19>25 Growth Rate is: +5.9%;Real: +4.5%.
  • Gen Mdse Stores – All actual & real sales were up for Club/SupCtrs & $ stores. Plus, even with an -34.7% decrease from December, Discount Dept Stores were only really down vs 2021. Now, 34% of their growth since 2019 is real. The other channels do better with an average of 53% in real growth. Avg 19>25 Growth: SupCtr/Club: 5.8%, Real: 3.2%; $/Value Strs: +5.6%, Real: +2.9%; Disc. Dept. Strs: +2.4%, Real: 0.8%.
  • Office, Gift & Souvenir Stores – After a +38.2% lift in December, Sales fell -32.4% in January. However, now they are only actually & really down vs 2019. All other comparisons are positive. Their recovery started late, but their progress may be slowly restarting again. Avg Growth Rate: -0.04%, Real: -1.5%
  • Internet/Mail Order – Sales are -26.8% from December but set a new January record of $108.4B. All measurements are positive, but their YOY growth, +2.8%, is only 19% of their average since 2019. However, 84.5% of their 126.8% growth since 2019 is real. Avg Growth: +14.6%, Real: +12.9%. As expected, they are by far the growth leader 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 Jun>Aug, rose Sep>Nov, fell Dec>Jan 24, grew Feb>May, fell Jun>Sep, grew in Oct, fell in Nov, rose in Dec, fell in Jan. All measurements are again positive and they are in 2nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 80% of their 75.2% growth since 2019 is real. Average 19>25 Growth: +9.8%, Real: +8.1%

Jan had its usual drop vs Dec, but the Relevant Retail drop was 25% less than avg. All big & small channels were down. The YOY lift was 7% below avg for Total and 18% below for Relevant, but 10 smaller channels and all big groups were up. Prices are still deflating in 7 channels, but cumulative inflation is impacting $ as only 6 channels were really up vs Jan 21. The Retail Recovery is still slow. The Jan commodities CPI was 0.8% but slowed to 0.6% in Feb. Let’s see if it impacts Retail.

Jan>Feb sales were down for all but Auto. A Jan>Feb Total Retail decrease has happened in 64% of the years since 1992 but the -4.0% drop is 8 times the -0.5% avg. There were 6 YOY $ drops. There were none in January. $ for all Big Groups were down vs Feb 24. The Total Retail drop of -0.9% vs Feb 24 was very different from their +4.9% 92>24 avg change. The Relevant Retail drop of -0.2% vs 24, was also much worse than their +4.7% avg. Inflation is still a factor. The CPI for all commodities slowed to 0.6% but it is 18.1% vs 21. The inflation surge was just beginning back then. There is some other “real” bad news. 8 measurements were “really” down. In January, there were only 2 – both from Gas Stations. Also in January, all but Gas Stations were YOY all positive. In February, there were no “all positives”. However, Relevant Retail has still been all positive in 7 of the last 9 months.

Overall – Inflation Reality– For Total Retail, inflation fell to +0.6% from 0.8% but sales were -0.9% vs 24. For Restaurants, inflation grew to +3.7% and their sales fell -2.3% vs 24. Gas prices fell, but $ales were -4.4%. That group is still in turmoil. Auto inflation slowed to 0.1% but it is still +19.8% vs 21. Their sales fell -0.9% vs 24. Inflation rose slightly to 0.6% from 0.5% for Relevant Retail. Their sales fell -0.2% and they are no longer all positive. Their slow recovery has paused.

Total Retail – Since Jun 20, every month but Apr 23, Jun 24 & now Feb 25 has set a monthly $ales record. In 2023>24, Sales were on a roller coaster. Up Jul>Aug, down Sept, up Oct>Dec, down Jan 24, up Feb>Mar, down April, up May, down Jun, up Jul>Aug, down in Sep, up Oct>Jan 25, down in Feb. Prices are +0.6% but YOY sales are -0.9%, far below the 92>24 avg change of +4.9%. However, 41.6% of the 19>25 growth is real, up from 39%. Inflation is low but cumulative inflation is still having an impact. Growth: 24>25: 1.8%; Avg 19>25: +6.6%, Real: +3.6%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, exceeding $1T for the 1st time in 2023. February $ are down vs 24 but they have the biggest lifts vs 21 & 19. Inflation rose to 3.7% in February and is now +25.0% vs 21 and +30.0% vs 19. Their -2.3% YOY drop is far below their +5.9% 92>24 avg. Plus, just 35.9% of their 56.5% growth since 2019 is real and they remain 3rd in performance behind Relevant & Total Retail. Recovery started late but inflation started early. Growth: 1.5%; Avg 19>25:+7.7%, Real: +3.1%. They just account for 13.6% of Total Retail $, but their strong growth has helped Total Retail.

Auto (Motor Vehicle & Parts Dealers) – They worked to overcome the stay-at-home attitude with great deals and 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 $. Their YE real 2022 sales numbers were even worse, -8.2% vs 21 and -8.9% vs 19. 2023 started a true sales rollercoaster but the $ set a new record, $1.595T. $ fell in Jan 24, grew Feb>Mar, fell Apr, grew May, fell June, grew Jul>Aug, fell Sep, grew Oct, fell Nov, grew Dec, fell Jan, then grew in Feb. Feb $ were up vs Jan but -0.7% vs 24. (Avg Feb Chge: +4.9%). All other comparisons are positive, but only 31.8% of 19>25 growth is real. Growth: 2.6%; Avg 19>25: +5.9%, Real: +2.1%

Gas Stations – Gas Stations were hit hard by “stay at home”. They started recovery in Mar 21 and inflation began. Sales got on a rollercoaster in 22 but set a record, $583B. Inflation started to slow in Aug and prices slightly deflated in Dec & Feb 23, then strongly fell in Mar>Jul to -20.2%. In Aug they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb 24. In Mar>May they grew, fell June, rose July, fell Aug>Dec, rose Jan, fell Feb. In Feb, actual $ are -4.4% vs 24 but up vs 21 & 19. Real sales are down vs Feb 24 & Ytd vs 21 & 19. (avg Feb chge: +5.5%). Growth: -0.8%; Avg 19>25: +4.3%, Real: -0.8%. They show the cumulative impact of inflation and how deflation can be both positive and 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. Their only down month until Feb 25 was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022, but all months set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, the roller coaster continued. A December lift set a new monthly record of $494.7B & an annual record of $4.997T. Sales fell Jan>Feb 24, rose in Mar, fell in Apr, rose in May, fell in June, rose Jul>Aug, fell Sep, rose Oct>Jan 25, then fell in Feb. The Feb -0.2% YOY drop is a big change from their 92>24 avg of +4.7%. However, 55% of their 46.9 % 19>25 growth is real – #1 in performance. Growth: 1.9%; Avg 19>25: +6.6%, Real: +3.8%. In 2024 their inflation rate dropped from 3.2% to 0.1%, stabilized at 0.5% Dec>Jan, then rose to 0.6% in February. Inflation is low but its cumulative impact continues to slow growth and even cause drops. We saw this in February. We’ll see what happens in the upcoming months.

In 24>25 inflation has slowed, but its cumulative effect still has a negative impact. In Jan, all actual YOY $ comparisons for all big groups were positive. In Feb, 6 were down. In Jan, there were only 2 real drops. In Feb, there were 8. In Jan YOY lifts vs 24, Total Retails was +4.4% and all groups were over +2.9%. In Feb, all were down vs 24, a big contrast to an avg lift over 4.7% for all. Finally, in January, 4 big groups were all positive in YOY comparisons. In Februar, none were all positive, even Relevant Retail (All positive in 7 of the last 9 months). February was very bad. The slow retail recovery has paused.

Here’s a more detailed look at February by Key Channels (98% of Ytd Rel Retl $)

  • Relevant Retail: Growth: +1.9%; Avg: +6.6%, Real: +3.8%. 10 were down from Jan. Vs Feb 24: 6 were up, Real: 5, Vs Feb 21: 10 were up, Real: 9. Vs 19: Dept Stores were actually & really down. Plus, Electronics/Appl were actually down.
  • All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are -2.4% from January and only their actual & real numbers vs 21 are positive. Their -7.5% Feb YOY drop is 19 times bigger than their -0.4% avg decrease. Growth: -3.2%; Avg 19>25: -0.003%, 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 -3.9% from Jan, but they are positive in all measurements. However, only 49.5% of their 40.6% 19>25 lift is real. Their 1.2% YOY lift is -85% below their 92>24 avg of +8.3%. Growth: 3.7%; Avg 19>25: +5.8%, Real: +3.1%.
  • Grocery- They depend on frequent purchases, so their changes are usually less radical. Actual $ are -8.7% from Jan but positive in all YOY comparisons. However cumulative inflation has hit them hard. Real $ are down vs 21 & Feb 24. Plus, only 12% of 19>25 growth is real. Their 0.5% YOY lift is -84% below avg. Growth: 2.8%; Avg 19>25: +5.0%, Real: +0.7%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are -6.5% from Jan but they are positive in all comparisons. Inflation has been relatively low so 61% of their 31.1% 19>25 growth is real. Their +2.5% YOY lift vs Feb 24 is -51% below avg. Growth: 3.4%; Avg 19>25: +4.6%, Real: +2.9%
  • Clothing and Accessories – Clothes mattered less when you stayed home. That changed in March 2021 with strong growth through 2022. Actual Sales are +5.9% from Jan and only down vs Feb 24, -3.2%. Their avg Feb YOY change is +3.5%. Real sales are down vs 24 but 72% of their 19>25 growth is real. Growth: 0.5%; Avg 19>25: +3.3%, Real:+2.5%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority.5. Prices are still deflating but they were high in 22. Sales are -1.3% from Jan but only “really” negative vs 21. However, only 31% of their 19>25 growth is real. YOY Feb lift: +1.5%, -54% below avg. Growth: 3.8%; Avg 19>25: +3.2%, Real: +1.0%
  • Electronic & Appliances – This channel has had many issues. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are -8.0% from Jan and they are only positive vs 21 & “really” vs 19. They have had strong deflation and it shows. Sales are -9.2% vs Feb 24. The avg Feb change is +2.6%. Growth: -4.7%; Avg 19>25: -0.05%, Real: +3.2%.
  • 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 stopped deflating and sales are -3.7% from Jan. Actual sales are only up vs 21 & 19 and Real sales are only up vs 19. Just 17% of their 19>25 sales growth is real. YOY sales vs Feb 24 were down -5.8%. The avg Feb change is +4.5%. Growth: -2.5%; Avg 19>25: +4.2%, Real: +0.8%.
  • 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. They have been on a sales rollercoaster since June and $ are -6.7% from Jan but actual and real sales vs 21 & 19 are now positive. Plus, 82% of their 19>25 growth is real. YOY Sales vs Feb 24 are -5.8%. Their 92>24 avg Feb change is +3.0%. Growth: -3.8%; Avg 19>25: +3.9%, Real: +3.2%.
  • 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 -4.5% vs Jan but positive in all comparisons. They are 2nd in the % increases vs 19 & vs 21. 73.3% of their 51.7% 19>25 growth is real. However, their 0.6% YOY Feb lift is -84% below their 92>24 avg of +4.2%. Growth: +4.4%; Avg 19>25: +7.2&%, Real: 5.5%.
  • 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. $ are -7.0% from Jan and their YOY lift of 1.7% is -83% below their 9.7% avg. However, they are positive in all comparisons and 82% of their 109.3% 19>25 growth is real. Growth: 2.2%; Avg 19>25: +13.1%, Real: +11.3%.

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 and 6 channels are currently deflating (down from 7 in Jan). Any deflation can help the Retail Situation. As expected, $ fell from January for 10 of 11 channels but the -5.5% drop for Relevant Retail was 2.75 times more than avg. Their -0.2% drop vs Feb 24 was a big change from their +4.7% avg. 6 of 11 smaller channels had a $ increase vs 24 but none of those lifts was above avg. Also in January, 4 big groups and 6 channels were both actually and really “all positive”. In February, there were only 3 – NonStore, Miscellaneous & Club/SupCtr/$. Even with this change, Relevant Retail has been all positive in 7 of the last 9 months. The biggest concern are YOY drops and smaller lifts. This has become widespread. As expected, February $ were less than January, but its performance, especially YOY was markedly worse. It looks like the Retail Market has paused in its slow 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 vs 2021 to show cumulative inflation.

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

Here are some answers to some obvious questions. Note: Overall Inflation slowed and there is more pricing stability.

  1. Why is the group for Non-store different from the Internet?
    • 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?
    • 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.
    • 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?
    • 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.
    • 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?
    • 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.