Spending, CPI, demographics of overall market

INFLATION CAUSES SLOWED RETAIL GROWTH

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Inflation affects spending. It is cumulative so even when the YOY rate slows, it can cause a range of issues – selling less product and even a drop in revenue. One impact that is often ignored is slowed $ growth. That is the focus of this report.

Before we get started on our main topic, let’s put the current situation into perspective. The post pandemic inflation surge affected the entire U.S. economy, but different channels took different paths. Here are some of note:

The National CPI – Inflation started in the Spring of 2021. The YOY rate peaked at 9.1% in June 22. Inflation has slowed since then but there has been no deflation, so prices are at their peak right now

Groceries – This expenditure has gotten the most publicity since it affects everyone. There have been 2 inflation waves. The first was minor. It began in the Spring of 2020 and slowed significantly in 12 months. The big surge began in the Fall of 2021. It peaked at 13.5% in August 22. Things returned to more normal rates by the Summer of 2023. There has also been no deflation, so prices are currently at their highest point.

Auto – Inflation in the Auto Big Group began slowly in the Fall of 2020 then took off in the Spring of 2021. It peaked at 23.9% in February 22, then began to slow but prices hit their high point in August. Deflation began in December 22 and was consistent until turning up Jan>Mar 25.

Gas Stations – Motor Fuel inflation began in Mar 21 and peaked at 60.2% in June 22 (along with prices). Prices began deflating in December 22 and have been on a rollercoaster since then. The biggest deflation was -26.7% in June 23.

Restaurants – Inflation began in the Fall of 2021 and peaked at 8.3% in March 23. Rates were back to normal by the Spring of 2024. There has been no deflation, so current prices are the highest in history.

Relevant Retail – Inflation began in the Fall of 2021 and peaked at 9.1% in August 22. Normal rates returned in the Summer of 2023. Prices peaked in October 23 until a recent lift pushed them to a new record high in March 25.

Total Retail (All Commodities) – The inflation surge began in the Spring of 2021 and peaked at 14.2% in March 22. Rates were back to normal by the Spring of 2023. Due to deflation, prices peaked in August 23.

All Services – Services are 60+% of all expenditures. Inflation began in the Spring of 2021 and peaked at 7.6% in January 23. Rates are still above normal and with no deflation, the current prices are the highest ever.

Now we will turn to slowed sales growth. All charts have the same format & channels as our monthly Retail report but different data. All have 6 data bars for each channel:

  1. 23>24 Y/E % Change
  2. Avg 92>23 Y/E Change
  3. 23>24 Y/E Chg vs Avg
  4. Ytd 24>25 % Change
  5. Avg 92>24 Ytd Change
  6. Ytd 24>25 Chg vs Avg

The 1st Chart Shows the Big Groups as of February 2025

February was not a good retail month but all big groups, but Gas Stations had Ytd lifts vs 2024. However, all 4 increases were -52+% less than their 1992>2024 average lift for Feb Ytd. The situation also was worse for all compared to Y/E 2024, but we must note that the drop for Gas was 79% less than in 23>24. You can see that all have high cumulative CPIs vs 21 & 19.

Now, Let’s look at some Pet Relevant Channels (82% of Ytd Relevant Retail $)

  • 23>24: 4 of 11 had $ drops; 5 of 7 had lifts below avg – ranging from -22% to -95%; 2 Above avg lifts.
  • Ytd 24>25: 3 of 11 had $ drops; 5 of 8 had lifts below avg – ranging from -20% to -97%; 3 Above avg lifts.
  • Bldg Matl/Farm – Prices continue to deflate vs last year, but cumulative inflation in this channel is the 2nd highest. Home Ctr/Hdwe had a miniscule lift in 2024, but sales dropped in 2025. Farm Stores had the exact opposite pattern. Both lifts are -50+% below avg.
  • Supermarkets – After slowing in 23>24, inflation turned up in 2025. They have the highest cumulative rate. $ales were up in 24 & Ytd 25. The 24 lift was below avg but the growth in 25 is 4.3% above avg (1 of 3 channels). This lift is only 0.1% more than avg and is above avg due to increased inflation.
  • Drug Stores – YOY inflation has been consistent but relatively low. Now, it’s the highest in this group of channels. They had $ lifts in 24 & 25 but both were -20+% below avg.
  • Sporting Goods – Deflation began in 23 and is accelerating. $ peaked in 2021 and then slowly and consistently dropped. $ are down in 23>24 & 24>25 – 1 of 2 channels. The drops are likely not inflation related.
  • Discount Dept Strs – Prices are deflating, and the cumulative rate is low. This channel has been fading so it is no surprise that they were down in both 24 and 25.
  • Clubs/SupCtrs/$/Value Stores – YOY inflation is low but cumulative inflation is high because groceries are a substantial part of their business. Sales were up for both in 24 & 25. However, only the $ store lift in 24 was above avg. The lifts in 25 were below avg, -57% (SupCtrs) & -97% ($ Strs).
  • Office/Gift/Souvenir Stores – Sales in this group of specialty stores have been slowing for years. A big part of the drop is due to the fact that consumers have increasingly moved to buying office supplies online. Sales fell in 2024 but the lift in 2025 was 4 times greater than their average. This is likely an anomaly and because this channel only accounts for 0.5% of Relevant Retail Sales, it will have little impact on the marketplace.
  • A/O Miscellaneous – This small channel has the best performance. Although their lift in 2025 is less than 2024, both are 43+% above avg. Pet Stores are in this group and undoubtedly contributed to the strong performance.
  • Internet/Mail Order – This is the biggest channel and the 12.3% avg lift is difficult to maintain. The 24 & 25 lifts are far below avg but the 25 lift is now -71%. Inflation since 2021 is one of the factors.

In the 23>24 sales change all big groups and 9 of 11 smaller channels had either a sales drop or a below avg lift. The situation slightly improved in 2025 as all big groups and 8 of 11 channels had a drop or below avg lift. Now, on to March…

The biggest change is that now Ytd Auto is above avg. This is probably due to consumers buying to avoid impending tariffs. Gas Stations are still down – now triple the February drop. Ytd 25 is still twice as bad as 24 for Relevant Retail and 3 times worse for Restaurants. Total Retail is still bad in 25, but a little better than February because of the Auto lift. We should note that the Ytd lifts for Restaurants, Total & Relevant Retail are still further below avg than in 2024.

Now let’s look at the growth slowing situation for Key Retail Channels in March (98% of Ytd Relevant Retail $)

  • 23>24 – 4 of 11 had drops; 6 of 7 had below avg lifts – range: -17% to -62%; 1 had an above avg lift.
  • Ytd 24>25 – 4 of 11 had drops; 5 of 7 had below avg lifts – range: -16% to -67%; 2 had above avg lifts.
  • Relevant Retail – 23>24: +3.6%, -21.7% vs avg; Ytd 24>25: +2.6%, -44.0% vs avg
  • Home Furnishings – $ fell 23>24 but they had a strong Ytd 25 lift, +40.4% vs avg. Like the Auto sales lift, it is likely due to consumers buying to avoid impending tariffs.
  • Electronics & Appliances – Deflation started in the Spring of 2022 and has been around -5>6% since then. They had a small lift in 24 that was -61.8% below avg but sales have fallen -1.9% Ytd in 2025.
  • Building Materials/Farm – YOY deflation continues but prices are still high vs 2021 & 2019. Sales are down in 24 and Ytd 25. Things are a little better thanks to the start of their annual Spring lift but Ytd $ are -6.2% below 2022.
  • Grocery – After slowing, inflation has turned up in 25. They have the highest rate vs 21 & 19. This is a very “needed” channel, so sales continue to grow in 24 and Ytd in 25. Both lifts are below avg but 24>25 (-31.3%) is a little better than 23>24 (-35.7%).
  • Health & Personal Care – They are 1 of only 4 channels still inflating but the rate is down from 2024. $ were up in 24 and now Ytd 25 but both lifts were below avg. However, 25 (-16.1%) is significantly better than 24 (-41.4%).
  • Clothing & Acc. – Prices are also inflating but their highest rate is vs 21, not 19. Sales are up in 2024 & Ytd 25. The lifts are small and both are below avg, especially 24>25 which is -62.3% lower than their avg March Ytd lift.
  • Sporting Gds/Hobby/Book Stores – Prices are still deflating, and cumulative inflation is low. $ are down -2.5+% in 24 and Ytd 25. Their average lift for both is 2.9%. This group has other problems. Sporting Goods $ took off due to Covid, peaked in 21 and then slowly dropped. Book stores have faded as consumers moved online.
  • Clubs/SupCtr/Value/$ Stores – Their current inflation is low but relatively high vs 21 & 19 because groceries are an important part of their product mix. Sales are up 23>24 and Ytd 24>25. The 24 lift is -55.6% below avg but the Ytd 25 lift is even worse, -65.5% below avg.
  • All Miscellaneous Stores (≈15% Pet) – Prices are deflating, and inflation vs 2021 & 2019 is low. Their sales were +5.7% in 2024 and +6.2% Ytd in 2025. The 2024 lift was 45.5% above avg but the Ytd lift was even better, +49.4%. Unfortunately, this channel only produces 3.6% of Relevant Retail $ so their great performance has little impact.
  • Nonstore – This is the biggest channel and its growth was largely fueled by the COVID induced Consumer movement to online shopping. They had an 8.1% increase in 2024, but it was still -16.8% below their annual average lift of 9.8%. Things have slowed significantly in 2025. Ytd sales are +4.2%, -52% below 2024 but -55.6% below avg. Their sales are +95% since 2019. If temporary factors cause your $ales to surge, keeping a high growth % is tough.

Before we summarize the results, let’s delve into the data. All numbers in the charts come or are derived from monthly retail sales reports from the Census Bureau – going back to January 1992. Businesses are required by law to submit timely and accurate data. Retail is defined as product providers so Service outlets are not included in their reports.

In my report, the Big Group charts represent 100% of Retail $ales. The February Channel chart is only Pet specific channels and represents 82% of Relevant Retail $ales. The March Channel chart covers the entire marketplace so it represents 98% of Relevant Retail $ales.

Now, let’s get to the subject – the impact of inflation on Retail Sales. High prices can cause less product being sold and even a drop in revenue. One of the less visible impacts is the slowing of growth. All of these can occur because of high prices. Since inflation is cumulative, they can still happen if inflation slows or even if prices deflate. We’ll focus on slowed growth. How do you measure it? The best way is to compare the current YOY lift to the long-term average. To get a broader view and evidence of change we compared the Y/E 23>24 and Ytd 24>25 lifts. In 2024, $ grew +3.6% for Relevant Retail, -21.7% below avg. In March 2025, their Ytd lift was +2.6%, -44.0% below avg. This is worse but the situation is complex. In the 11 channels:

  • 23>24: 4 (16.7% of $) had drops; 7 (81.3% of $) had lifts, 6 (77.7% of $) were below avg and 1 (3.6% of $) was above avg
  • 24>25: 4 (14.4% of $) had drops; 7 (83.7% of $) had lifts, 5 (77.3% of $) were below avg and 2 (6.3% $) were above avg.

They look very similar and the above/below avg lift situation in 25 looks better, not worse. However, the 5 below avg channels in 25 had essentiallly the same $ share as the 6 in 24 but their disparity vs avg was much worse. This produced the -44% below avg Ytd 25 lift for Relevant Retail. We should also note that the $ share of  the above avg lifts is insignificant and 2 of the 3 total lifts are by 1 channel – Miscellaneous Stores. The other is from Furniture. Like Auto, the above avg lift for Furniture was due to a surge in buying to avoid impending tariffs. The slowing lift problem is widespread and not getting better. In March 2025, channels generating 91.7% of Relevant Retail sales had either a below avg Ytd increase or a drop in sales vs 2024. We should be very concerned as the impending tariff tsunami will only make the situation worse.

Retail Channel $ Update – February Monthly & March Advance

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In March, YOY Commodities’ inflation slowed to 0.05% from 0.6%. Even with a very low inflation rate, high cumulative inflation vs 21 can still impact consumer spending and slow $ales growth.  We saw more evidence of this in March. Total Retail $ were +4.2% vs 24, -16% below the average 92>24 change of +5.0%. Relevant Retail was worse, +3.4%, -29% below the March average of +4.8%. The situation is complex, but the recovery is slowly restarting. 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 February Monthly Report and then go to the March 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:

  • 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 were down from January and there were 5 actual YOY sales drops – all vs 24. We should note: Gas Stations are selling less product Ytd than in 2021 & 2019. No group is “all positive” – a significant change from 4 in January. Relevant Retail has been all positive in 11 of the last 15 months and in 7 of the last 9. ($ are Not Seasonally Adjusted)

The February Monthly is $2.7B more than the Advance report. Restaurants: +$1.0B; Auto: -$1.1B; Gas Stations: +$0.2B Relevant Retail: +$2.6B. Relevant Retail was the driver in the $ales decrease vs January, but all big groups were down. A Jan>Feb decrease in Total Retail  has happened in 64% of the years since 1992. However, the -3.5% drop was 7 times the -0.5% average. There were 5 YOY drops in actual sales vs none in January. There were 8 “real” sales drops (only 2 in Jan) and no group was “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 54% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in February (81% of Feb Rel Retl $)

Overall– All 11 were down from January. Vs Feb 24, 5 were actually and 4 “really” up. Vs Feb 21, 11 were up but only 6 were real increases. Vs 2019, The only negative was Off/Gift/Souv. They were actually & 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 19.9% from 21 and 22.0% from 2019 which is having an impact. Sales vs January were -4.4% for HomeCtr/Hdwe and -3.4% for Farm Stores. Vs other years, actual $ are only down monthly vs 24 for both & Ytd vs 24 for HomeCtrs. In Real $, both are up vs 2019 and Farm Stores are up Ytd vs 24. Plus, only 16% of the Building Materials group’s 19>25 lift was real. Avg 19>25 Growth: HomeCtr/Hdwe: 3.9%, Real: 0.5%; Farm: 5.4%, Real: 1.9%
  • 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 62% of their 2019>25 growth is real. Supermarkets’ actual $ are up in all comparisons. They are only “really” down monthly vs 2024 & 2021 and Ytd vs 2021. However, only 14.1% of their 19>25 increase is real growth. Avg 19>25 Growth: Supermarkets: +5.1%, Real: +0.7%; Drug Stores: +4.7%, Real: +3.1%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -3.7% from January, and their only positives are actual and real vs Feb 21 & 2019. Prices are still deflating, -5.3% 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 72.4% of their 36.2% lift since 2019 is real. Avg 19>25 Growth Rate is: +5.3%; Real: +4.0%.
  • Gen Mdse Stores – All actual & real sales were up for Club/SupCtrs. $ Stores are only actually & really down vs Feb 24 and really down Ytd vs 24. Discount Dept Stores are only actually up vs 2021 & 2019. Real sales are only positive vs 2019 & only 3% of their growth since 2019 is real. The other channels have an average of 49.5% in real growth. Avg 19>25 Growth: SupCtr/Club: 5.9%, Real: 3.1%; $/Value Strs: +5.5%, Real: +2.8%; Disc. Dept. Strs: +1.7%, Real: 0.1%.
  • Office, Gift & Souvenir Stores – After a -33% drop last month, sales fell -6.5% from January. However, they are only actually & really down vs 2019 & vs Feb 24. They are also really down vs Feb 21. Their recovery started late, but their progress may be slowly restarting again. Avg Growth Rate: -0.4%, Real: -1.9%
  • Internet/Mail Order – Sales are -4.9% from January but still set a new February record of $103.2B. All measurements are positive, but their YOY growth, +3.5%, is only 24% of their average since 2019. However, 83.8% of their 128.4% growth since 2019 is real. Avg Growth: +14.8%, 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 Oct, fell Nov, rose Dec, then fell Jan>Feb. All measurements are again positive and they are in 2nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 79% of their 74.9% growth since 2019 is real. Average 19>25 Growth: +9.8%, Real: +8.0%

Feb had its usual drop vs Jan, but the Relative Retail drop was 2.4 times bigger than the avg. All big & small channels were down. The YOY Feb lift of +0.5% was 90% below avg for Relevant Retl and 6 smaller channels and all big groups were down. Prices are deflating in 5 channels (7 in Jan) but cumulative inflation still impacts $ as only 6 channels were really up vs Feb 21. The Retail Recovery has paused. The Feb commodities CPI was 0.6% but slowed to 0.05% in Mar. Let’s see if it impacts Retail.

Feb>Mar sales were up for all. A Feb>Mar Total Retail lift has happened every year but 2020 since 1992 and the 14.9% lift is 11.7% above avg. There were 2 YOY $ drops. There were 5 in February. $ for all Big Groups but Gas Stations were up vs Mar 24, but the Total Retail lift of 4.2% vs Mar 24 was 15.7% below their +5.0% 92>24 avg. The Relevant Retail 3.4% increase vs 24 was also significantly below their +4.8% avg (-29%). Inflation is still a factor. The CPI for all commodities slowed to 0.05% but it is 16.7% vs 21. The inflation surge was just beginning back then. There is some other pretty good “real” news. 6 “real” measurements were down. In February, there were 8. Also in February, no group was all positive. In March, Total & Relevant Retail are both all positive. That’s 8 of the last 10 months for Relevant Retail.

Overall Inflation Reality– The Total Retail CPI fell to +0.05% but the $ lift vs 24 was -16% below avg. Restaurant inflation grew to +3.8% and their sales lift was 30% below avg. Gas prices fell to -9.8%, but they are still in turmoil. Auto inflation rose to 0.3% but it is still +18.9% vs 21. Their sales grew 9.8% vs 24 (79% above avg – pre-tariff buying). Inflation rose to 0.7% for Relevant Retail. Their YOY lift was 29% below avg but they are again all positive. Slow progress has restarted.

Total Retail – Since Jun 20, every month but Apr 23, Jun 24 & 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>Mar. Prices are +0.05% but YOY sales are +4.2%, 15.7% below the 92>24 avg change of +5.0%. However, 42.1% of the 19>25 growth is real. Inflation is low but cumulative inflation is still having an impact. Growth: 24>25: 2.8%; Avg 19>25: +6.4%, Real: +2.9%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, exceeding $1T for the 1st time in 2023. March $ are up vs 24 and they have the biggest lifts vs 21 & 19. Inflation rose to 3.8% in March and is now +25.3% vs 21 and +30.3% vs 19. Their 4.2% YOY lift is 30.1% below their +6.0% 92>24 avg. Only real Ytd vs 24 is negative, but just 35.7% of their 56.6% growth since 2019 is real. They are 3rd in performance behind Relevant & Total Retail. Recovery started late but inflation started early. Growth: 2.8%; Avg 19>25:+7.8%, Real: +3.1%.They just account for 13.7% 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>Feb, then grew in Mar. Mar $ were +9.8% vs 24. (79% above avg – pretariff buying). Only real $ monthly & Ytd vs 21 are negative, but only 31.3% of 19>25 growth is real. Growth: 4.9%; Avg 19>25: +5.8%, Real: +2.0%

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 their $ grew, fell June, rose July, fell Aug>Dec, rose Jan, fell Feb>Mar. In Mar, $ are -4.5% vs 24 and only up vs Mar 21 & Ytd vs 21 & 19. Real sales are down vs Mar 21 & Ytd vs 21 & 19. Growth: -2.0%; Avg 19>25: +3.9%, Real: -0.6%. 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, fell in Feb, then rose in Mar. The Mar 3.4% YOY lift is 29% below their 92>24 avg of +4.8%. However, they are all positive again and 54% of their 47.0 % 19>25 growth is real – #1 in performance. Growth: 2.6%; 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 Feb & 0.7% in Mar. Inflation is low but its cumulative impact slows growth and can even cause drops. We saw this in Feb>Mar. We’ll see what happens in the upcoming months.

Inflation has slowed, but its cumulative effect can be negative. In Feb, 6 actual YOY $ comparisons for all big groups were negative. In Mar, only 2 were down. In Feb, there were 8 real drops. In Mar, there were 6. In Feb, all were down in YOY lifts vs 24. In March, only Gas Stations were down, but the lifts for all but Auto were significantly below avg. Finally, in Feb, no big group was all positive in YOY comparisons. In Mar, Total & Relevant Retail were all positive. Relevant Retail has now been all positive in 8 of the last 10 months. February was very bad. March was markedly better, but the recovery is still slow.

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

  • Relevant Retail: Growth: +2.6%; Avg: +6.6%, Real: +3.8%. All 11 were up from Feb. Vs Mar 24: 10 were up, Real: 9, Vs Mar 21: 6 were up, Real: 5. Vs 19: Only Dept Stores were down – both actually & really.
  • All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are +12.6% from February but only their actual Ytd numbers vs 21 are positive. Their -5.5% Mar YOY drop is 20 times bigger than their -0.3% avg decrease. Growth: -4.0%; Avg 19>25: -0.4%, Real: -2.0%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +13.5% from Feb, and they are positive in all measurements. However, only 48.1% of their 39.5% 19>25 lift is real. Their 1.5% YOY Mar lift is -82% below their 92>24 avg of +8.4%. Growth: 2.8%; Avg 19>25: +5.7%, Real: +2.9%.
  • Grocery- They depend on frequent purchases so their changes are usually less radical. Actual $ are +8.6% from Feb and positive in all YOY comparisons. However cumulative inflation has hit them hard. Real $ are down vs Mar 24, Mar 21 & Ytd 21. Plus, only 10% of 19>25 growth is real. Their 1.0% YOY lift is -71% below avg. Growth: 2.2%; Avg 19>25: +4.9%, Real: +0.5%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are +8.9% from Feb and they are positive in all comparisons. Inflation has been relatively low so 63% of their 31.4% 19>25 growth is real. Their +6.4% YOY lift vs Mar 24 is 25% above avg. Growth: 4.3%; Avg 19>25: +4.7%, Real: +3.1%
  • Clothing and Accessories – Clothes mattered less when you stayed home. That changed in March 2021 with strong growth through 2022. Actual Sales are +18.6% from Feb, and they are only really down vs Mar 21. 67% of their 19>25 growth is real. $ are +1.8% vs Mar 24, -67% below avg. Growth: 1.3%; Avg 19>25: +3.1%, Real:+2.1%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are still deflating but they were high in 22. $ are +9.8% from Feb and only actually down vs Mar 21. They are really down monthly & Ytd vs 21. Only 27% of their 19>25 growth is real. YOY Mar lift: +6.0%, 62% above avg. Growth: 4.9%; Avg 19>25: +3.1%, Real: +0.9%
  • 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 +8.3% from Feb and they are only actually down vs Mar 21 & Ytd vs 24. Their strong deflation shows in high real numbers. Sales are +1.5% vs Mar 24, -41% below avg. Growth: -1.9%; Avg 19>25: 0.15%, Real: +3.4%.
  • 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 deflating again, and sales are +26.8% from Feb. Actual $ are only up vs Mar 24 and Ytd 21 & 19. Real sales are only up vs Mar 24 and Ytd vs 24 & 19. Just 23% of their 19>25 sales growth is real. YOY sales vs Mar 24 were +4.2%, -7% below avg. Growth: -0.04%; Avg 19>25: +4.5%, Real: +1.1%.
  • 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+23.6% from Feb. Actual & real sales are only up vs Mar 24 & 19. Real Ytd sales vs 24 are also up. 84% of their 19>25 growth is real. YOY Sales vs Mar 24 are +0.1%, -98% below avg. Growth: -2.5%; Avg 19>25: +4.0%, Real: +3.4%.
  • 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 +14.7% vs Feb and positive in all comparisons. They are 2nd in the % increases vs 19 & vs 21 and 73.9% of their 55.1% 19>25 growth is real. Plus, their 6.7% YOY Mar lift is 40% more than their 92>24 avg of +4.8%. Growth: +6.2%; Avg 19>25: +7.6%, Real: 5.9%.
  • NonStore Retailers – 90% of their $ales 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 +8.5% from Feb but their YOY lift of 6.1% is -38% below their 9.8% avg. However, they are positive in all comparisons and 82% of their 112.7% 19>25 growth is real. Growth: 4.2%; Avg 19>25: +13.4%, Real: +11.6%.

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 7 channels are currently deflating (up from 5 in Feb). Any deflation can help the Retail Situation. As expected, $ rose from February for all 11 channels but the +12.1% lift for Relevant Retail was slightly below avg (-0.6%) and their +3.4% lift vs March 24 was -29% below avg. 10 of 11 smaller channels had a $ increase vs 24 but only 3 of those lifts were above avg. Also in February, no big groups and only 3 channels were both actually and really “all positive”. In March the situation was a little better. 2 big groups and 4 channels were all positive. Relevant Retail has now been all positive in 8 of the last 10 months. The biggest concern is still YOY drops and smaller lifts. This has become widespread. As expected,  $ales in March were up from February, but the monthly performance, especially YOY was still below par. The Retail Market recovery has restarted but progress is slow.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups5 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 but grocery prices had a significant lift.

  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.

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.

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 $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 $. In 2023, the industry appears to have fully recovered with spending lifts in all 4 segments for the 1st time since 2014. A 20% increase in Veterinary and a record lift in Food drove the 3rd largest increase in history, +$14.89B, and Total Pet Spending reached $117.6B.

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 2022 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
  • 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 2023 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, +626%; annual growth rate of 6.6%. This will help put our comparisons into better perspective.

2022>2023 CHANGE in SHARE of TOTAL PET SPENDING

Food: 38.7%, Up from 37.7%

Veterinary: 30.3%, Up from 28.6%

Pets & Supplies: 19.6%, Down from 21.4%

Non-Vet Services: 11.4%, Down -0.6% from 12.0% 

In 2023, Food & Veterinary gained 2.4% in share in Total Pet $ from Supplies & 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 but are again below 20% in 2023 (19.6%). Both 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 lifts in 2021 & 2023, 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 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. With 1 exception – Age, 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 from 1 to 4 groups in every segment. However, to have a true side by side comparison we need to use the same groups for all. The groups that we chose make sense and are the same as 2021. You will see that in a few cases, the share of $ is close  but does not meet our target of 60%. Most of these are due to Food spending becoming significantly more balanced.

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 a 79.9+% market share in every Segment. Minorities account for 33.7% of CUs but only 15>20% 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 & in all segments but Supplies. Minorities gained in Total by different paths. Hispanics: ↑Food & Vet; African Americans: ↑Food & Services; Asians: ↑ Services only.
  • 2+ People in CU – 2+ is still the key in pet ownership. However, the results were mixed. Singles had less CUs but gained share in Total & the Product segments. 2+ CUs had the opposite pattern. 2 People only gained in Veterinary & 4 people only in Services. 5+ People gained in both Service segments. Once again, 3 People CUs was the only size to gain share in Total and in every Industry Segment but 2 People still has the biggest share in all.
  • Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. In 2023, Total & the Product Segments are below 80%. In 2022 it was only Supplies. The group lost 1.6 % in Total Pet share. The loss was driven by big drops in Food & Vet by those w/Mtge, despite a 4.7% gain in Services. W/O Mtge were only up in Vet. Renters gained share in all but Services – the opposite of Homeowners.
  • Suburban & Rural – They gained 0.1% in Total Pet. Gains in Supplies & Services overcame drops in Food & Vet. The Suburbs 2500> gained share in all but Supplies. Rural had the exact opposite pattern. Center city was down in Total Pet and only up in Food & Veterinary.
  • Over $70K Income – INCOME MATTERS MOST IN PET SPENDING! Income has grown in importance, and all segments, but Food performed at 140+%. $70K> gained 3.2% in CU share and 2.4% in Total. They had gains in every segment. Food: +0.6%; Supp: +1.1%; Serv: +2.2%; Vet: +6.3%. Spending appears more balanced in income for all segments but Veterinary. However, the situation is more complicated. Consider this: The only income group to gain in all segments was $200K>, but <$40K gained 5.2% in Food share. As I said, spending is complex, especially in Food.

  • Everyone Works – Income is important, but not always the # of Earners. The group’s share fell for Total & Food. It was not a good year for 2 & 3 Earners – down in Total & 3 of 4 segments. 1 Earner, Singles gained in all but Services. Supplies are now 70+%, but it was not enough overall. However, Services is again 120+% and now joined by Supplies
  • All Wage & Salary Earners– Incomes vary widely in this group, so performance is often lower. The group gained 0.6% in CU share, but lost share in Total Pet and all segments but Veterinary. The drop was driven by Managers and Service Workers. Both were down in Total and 3 of 4 segments. Tech/Sls/Cler had the best year with the exact opposite pattern. Blue Collar also contributed to the share loss as they were down in Total, Supplies & Veterinary.
  • Married Couples – Marriage is 1st in importance to spending in Food, 2nd in Total & Supplies, 3rd in Veterinary but falls to 4th in Services. In 2023 their share & performance fell in Total, Food & Vet but grew in Services & Supplies. The best performer inside the group was CUs with a child 6>17. Outside of the group, it was Unmarried, 2+ Adults.
  • College Graduates > – College Grads rebounded from their 2022 drop but not enough to make up for the huge drop by Associate’s. These were contributing factors in the decision to change this group back to College Graduates only. College Grads gained share in all but Supplies. The biggest gains were in Vet & Services. They are near their 2021 share in both of these segments, but still -5% in Total, -7% in Food & -12% in Supplies. Education has gained importance. It is again #2 for Total and both Services segments but is only #5 for Food & #8 for Supplies.
  • 35 to 64 yrs – Includes the 3 highest income segments. They lost share in Total Pet and Food, stayed even in Supplies & Vet and gained in Services. They are still above 60% for all but Food & Total. The <60% shares were due to a huge spending lift in Food by the 65> group which pushed 65>74 to the top in share. Pet Food is definitely more balanced by age group, but this is likely a 1 time event. Because 35>64 is the leader for 3 of 4 segments, I stayed with them.

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 2022. The categories are divided into related groups. 1st, Income

  • Income – Income matters. All winners were $150K> and unchanged from 2022. The disparity between 1st and last place in Total fell by 15%. Veterinary was -6% but Food disparity fell -27% due to gains by <$40K. The gap in Supplies grew by 3% but Services was 26% bigger. More balanced spending in Food but much less balance in Services.
  • # Earners – The highest income 3+ Earners group fell from the top in 3 segments. They were replaced by 2 Earners in Vet & Services. The most impactful changes were in Food which drove disparity down -32% & even -18% in Total. Disparity increased only 8% in Services but it grew by over 23% in both Supplies & Veterinary.
  • Occupation– Mgrs & Professionals are #1 in CU income and expenditures, but they were replaced by Self-Employed as best performer in the Product segments. Blue Collar & Service Workers both picked up another bottom spot. The spending disparity decreased by 9% in Total, 27% in Services, 16% in Food but only 1% in Supplies. Only Veterinary had an increase but it was substantial, +33%.

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

  • Racial/Ethnic– White Non-Hispanics are the top performer in all segments and African Americans are on the bottom in all but Food. They have the lowest income and only 25% own Pets. High income Asians did replace them in Food, but they also have low Pet ownership. Total Disparity was -4% but mixed among the segments. Food: -11%; Supplies: +18%; Vet: +6%; Services: -6%. Food continues to be more balanced, but Vet disparity is again over 100%.
  • Age – The 45>54 yr-olds no longer “rule”. They were replaced by older groups. The bottom is even older. Only <25 in Services is not 75+. The Total disparity fell -12%. 2 Segments were down – Food: -14% & Vet: -42%. 2 Segments were up – Supplies: +14% & Services: +18%. Some big swings, but again only 1 is over 100% – Services. In 2022, it was Vet.
  • Generation – Gen X still “rules”, all but Food. Gen Z is still at the bottom in Services while Born <1946 is the worst in the others. Disparity was -8%. Food (-17%) & Vet (-13%) were down. Supplies (+15%) & Services (+15%) were up.

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

  • Education – Higher Education generally correlates with income. The winners are College Grads while the losers are HS Grads or less. The Disparity gap rose +3%. Food: -18%; Supp: -9%; Vet: +26%; Serv: +45%. Services rely on income.
  • CU Composition – 9 of 10 best/worst are different from 2022. Except for Food & Vet, married w/kids wins. The loser is Single Parents for all. Disparity rose 7%. -10% drops in Products couldn’t overcome 15>29% increases in Services.
  • CU Size– 3 People won all but Services (4) while “1” remained solidly on the bottom. Disparity was down only -0.1%. There was an increase in Veterinary but drops in all others. All changes were small.

  • Housing – The perennial winner and loser. Disparity fell -6%. Food (-13%), Supp. (+2%), Vet (-15%), Serv (+24%).
  • Area– Another perennial winner & loser. The disparity dropped -3% for Total, Food (-2%), Supp (+27%), Vet (-19%) and Serv (-2%). The most notable change was the big lift in Veterinary spending in Center City areas.
  • Region – Midwest & West swapped spots 3 times. The South is at the bottom in all Segments. Disparity rose +10%. Food (+5%), Supp (+15%), Vet (+12%) and Serv (+7%). Big changes are unusual for this lowest disparity category.

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

The fact that income produces the biggest spending disparity is no surprise. Pet spending is driven by income. The low Food Income disparity and the Regional “wins” reflect a growing balance in spending in some categories. 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.

Services & Supplies disparity grew while Vet was essentially stable. A big drop by Food drove Total down. The disparities for all but Service & Supplies are below 2019 levels. Food has the lowest disparity for the 3rd  straight year. The gap grows as you move from needed to discretionary. Services is again on top & have the only gap over 100%. The Vet disparity also grew slightly but it fell to 3rd highest. Total Pet is down 5% from 22 & 21% from 21, much more balanced.

  • Food – Down 14% from 2022, 30% from 2019, but 159% from the 2020 binge. They are the most balanced.
  • Supplies – The record 2021 increase produced a record disparity. The lift in 2023 pushed them 9% above 2019.
  • Veterinary – Their 2021 lift increased the difference to 100+%. Despite The 2023 lift, they are still below 2019.
  • Services – Only a small $ lift in 2023, but the gap widened by 11%. They are again the only segment over 100% .

This chart shows the number of new winners/losers.

There was more turmoil than in 2022, but Food again led the “pack” with nearly half of the winners & losers changing as their spending exploded in 2023.

  • With a record $6.81B increase in 2023, the turmoil in Pet Food continued with 11 changes. However, there were more new winners than losers – the opposite of 2022.
  • Supplies spending grew in 23 and the # of changes rose from 5 to 8. Winners: 5 up from 4; Losers: 3 up from 1
  • The Veterinary lift was also big and the # of changes jumped to 9 from 4.
  • Services growth slowed but the # of changes was again 4. However, there were no new losers in 23.

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 2022
  • ↕ = Flipped from 1st to Last or vice versa

First, the Income related categories.

  • Income – 3 winners & 5 losers were new with 1 flip. 4 winners are over $100K but no losers. All losers were below average income, 4 <$50K. It looks like the win by <$30K in Food was accomplished by trading Vet $.
  • # Earners – All but 2 are new with 2 flips. In Vet & Services, the winner & loser were driven by income. In Products, it was the opposite pattern. In Vet, both flipped. In Total Pet, all segments spent more. This produced an unusual result. The highest income group had the smallest increase while the 2nd highest income was the “winner”.
  • Occupation – No repeats and 6 flipped. Retirees won Total (flip), Food (flip) & Services. The high income, Mgrs & Professionals had 2 flips – to the top in Vet & to the bottom in Food. Tech/Sls/Clerical lost Services but flipped to the top in Supplies. Blue Collar had 20+% lifts in Food & Services but even bigger drops in Vet & Supplies which drove them to the bottom in those categories and Total.

Now the Age and Racial/Ethnic Categories

  • Racial Ethnic – 4 repeats & 4 flips. White, non-Hispanics won in all for the 1st time since 2014. African Americans flipped to the bottom in Supplies & Vet. Asians lost in Food & Total – with the smallest increase. Hispanics lost in Services. Overall, it was a good year for Minorities, +24.3% in Total Pet $. Whites were +12.3%.
  • Age – 1 repeat and 3 flips. There were 3 different winners but 4 were over 55, 1 more than 2022. In 2023, 45>54 was the big loser. They lost Food & flipped from 1st to last in Vet and Total with the smallest increases. There were 3 different losers. 55>64 lost in Supplies. The 25>34 yr-olds lost Services. This is not surprising as they had a 43% lift in 2022. <25 had a great year with lifts in all segments, but they are by far the smallest segment. They didn’t win in $ but they had the biggest % lift in Supplies, Veterinary and Total Pet.
  • Generation – 1 repeat & 2 flips. Millennials reinforced their importance with wins in Food and Total. The high income Gen X won the more discretionary Supplies & Services but flipped to the bottom in Food. Boomers were 2nd in Total & Food but won in Vet. The oldest group, Born <1946, retained their spot at the bottom in Total and added Vet & Services. Gen Z didn’t win but they increased spending in all segments, 50+% in all but Non-Vet Services.

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

  • Education – 1 repeat & 1 flip. Higher education is usually tied to increased income and pet spending but not always. It was a strong year for College Grads with wins in all but Supplies. HS Grads w/some College won Supplies while Adv. College Degree lost again. HS Grads lost Vet but after a big lift in 22, Associates lost Food, Services & Total in 23.
  • CU Comp. – 1 repeat & 1 flip. CUs with no Children – Singles (products) & Married, Couple Only (all services & Total) won all segments. Except for Unmarried 2+ Adults in Services, the losers all had children. Married, Oldest Child 18> in Supplies & Vet. Single Parents in Food & Total.
  • CU Size– 1 repeat & 2 flips. 4 different winners. 3 people was the only repeat, in Supplies. 2 People won Veterinary and Total Pet. There was no clear pattern in the winners. 4 people was the loser in all but Services (1 Person).

  • Housing – 4 repeats & 3 flips. In all but Services, all segments spent more. Homeowners w/Mtges are on top in all. Renters lost in Services and had the only decrease on the chart. Homeowners w/o Mortgage lost in all other segments and Total. However, we should note that they increased spending in all 4 of their losses. Another thing of note is that this is the second consecutive dual flip in Supplies.
  • Area – 5 repeats with 2 flips. The big Suburbs are the normal winner. They held onto the top spot in Services, Food & Total and flipped to the top in Vet. Rural, in Supplies, was the only other winner. Rural lost in every other segment and Total but finished last while increasing spending. Center City is the usual loser and they lost in Supplies with the only spending drop. They also tied for last in Food with Rural but they did it with a $1.86B increase in spending.
  • Region – Again no repeats but 4 flips. The West won the needed segments – Food & Vet while the Northeast won the more discretionary Supplies & Services, plus Total Pet. The Midwest, 2022’s big winner, lost Vet but spent more. The South finished at the bottom in all other segments and Total.

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.

  • All were up. Food & Vet $ had big lifts while the Supplies & Services increases were small.
  • After 2 record increases, Services $ slowed to +8.5%. However, they again were the repeat leader (7, down from 13)
  • With big turnarounds in spending, Supplies (9) and Veterinary (13) had the most flips. 62% of Vet flips were last to 1st while 56% of Supplies flips were 1st to last. Services had 2 flips, up from 0 in 2022. Food had a big drop in their numbers as they fell from 11 flips in 2022 to 4 flips in 2023.
  • Total Pet also shows increased stability. 4 repeats, up from 3 in 22. Only 3 flips, down from 10 in 22.
  • There are 24 winners/losers. Here’s the number different from 22. (last yr vs 21) Food: 19 (22); Supplies: 20 (23); Vet: 23 (21); Services: 17 (11); Total: 20 (21). Any change in growth pattern causes 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 7 “SUPER Honorable Mentions” for 2023…

7 segments made the list, 2 less than 2022. Supplies & Total Pet tied for the lead with 5 segments on the “Super” list. Veterinary had 4 and Food & Services had 3. All segments on this year’s list are generally “low profile” but contributed notably to the industry. We should give special kudos to Gen Z and No Earner, 2+ People CUs. These 2 groups won Honorable Mention in 3 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 had a not so great year but are still the CU spending leader in Total Pet and all segments but Food. Spending is skewing towards their older, wealthier members and young Boomers. Millennials had a strong year and are close behind. Gen Z is definitely “in the game”.
  2. The “Magic” number is 3 – As spending has skewed younger the best performing CUs in all but Services have 3 people. Services’ best is 4. However, 2 person CUs still have the largest share of CU’s, 33.1% and 100+% performance in Total Pet and every segment. They’re not done yet.
  3. Improved spending balance in Food – The performance gap between the best and worst narrowed in Food & Total Pet. It widened in all other segments, but only by 1% in Veterinary. However, the disparity is still less than in 2019 for all but Supplies & Services. So “needed” segments are the same or better. Discretionary segments are worse.
  4. Income is still the most important factor – The gap between best & worst narrowed in Total, Food & Vet, but grew in Supplies & Services. The disparity is still the biggest of any category.

And Finally, What you have all been waiting for…

THE ULTIMATE 2023 PET SPENDING CUs – Side by Side

Color Highlighted cells are different from Total Pet; * = New in 2023

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 Total & all segments but Non-Vet Services, where it is 4.

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 Formal after HS Degree, Everyone works with 2+ Earners. These are characteristics present in all of the Ultimate Pet Spending CUs.

Generation/Age – Gen X rules all but Food – Boomers. Age is skewing older to the oldest Gen Xers or younger Boomers.

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 2023. Please refer back to the individual segment reports to get more details.

There is one consistent winner in the Pet Industry…

…OUR PET CHILDREN

 

 

Petflation 2025 – February Update: Rose to +2.4% 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. Prices fell -0.1% in Nov, but rose 0.04% in Dec, 0.7% in Jan 25 and 0.4% in Feb to a record high. However, the CPI fell to +2.8% from +3.0% in January. Grocery prices rose 0.1% from January but YOY inflation was stable at 1.9%. After 12 months of 10+% YOY monthly increases, grocery inflation has now been below 10% for 24 months. 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>Feb 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 Feb 23 to Feb 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 Feb, Pet prices were up 0.8% from Jan. Food (+0.6%) & Vet (+2.3%) were up while Supplies (-0.7%) & Services (-0.2%) were down.

In Feb 23, the CPI was +17.1% and Pet was +18.6%. 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, Total Pet fell. In Jan>Feb, the segments were split but Pet hit a record high.

  • 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>Feb to a record high but 28.1% of the increase since Dec 19 happened from Jan>Jun 22 – 10% 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↓, Mar↑, Apr>May↓, June↑, Jul>Oct↓, Nov↑, Dec↓, Jan>Feb↑. 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↑, Mar/Apr↓, May/Jun↑, July↓, Aug↑, Sep/Oct↓ & Nov/Dec↑, Jan>Feb↓.
  • 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>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 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, grew Feb>May, fell Jun>Jul, grew Aug>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 Sep/Oct, then fell in Nov. In December prices turned up and grew through March 24 to a record high. Prices fell in April, rose May>June (record), fell Jul>Sep, rose Oct>Nov, fell in Dec, then rose in Jan>Feb to a record high.

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>25 & 19>25. Petflation rose from 2.0% to 2.4% but it is still below the National inflation rate (by -14.3%). 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 0.4% from January and were +2.8% vs Feb 24, down from +3.0% last month. Grocery inflation was stable at 1.9%. Like January, only 2 had price decreases from last month – both Pet: Supplies & Services. There were also 2 drops in Oct/Nov but 3 in Aug/Sep/Dec and 5 in July. The national YOY monthly CPI rate of 2.8% is down from 3.0% and is 12.5% below the 23>24 rate and 65% less than 21>22. The 24>25 rate is above 23>24 for 4 – Groceries, Medical Services, Veterinary & Haircuts. In our 2021>2025 measurement you also can see that over 80% of the cumulative inflation since 2019 has occurred in 6 segments, 4 are Pet – all but Vet, 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 98% 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 +4.1% while the CPI for Commodities is 0.5%. This clearly shows that Services are driving almost all of the current 2.8% inflation. The situation in Pet is even worse. Petflation is currently 2.4%. The combined CPI for the 2 Service Segments is 6.6%, while the Pet Products CPI is -0.6%.

  • U.S. CPI– Prices are +0.4% from Jan. The YOY increase is 2.8%, down from 3.0%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 40+% higher than the target. The February decrease follows 4 straight lifts after 6 consecutive drops from Apr>Sep. The current rate is below 23>24 but the 21>25 rate is still +21.3%, 81.3% of the total inflation since 2019. The Inflation surge hadn’t started in January 2021, +1.7%
  • Pet Food– Prices are +0.6% vs Jan and +0.4% vs Feb 24, a big change from -1.1%. They are still far below the Food at Home inflation rate of +1.9%. February is the first inflationary month for Pet Food since +1.8% in March 2024 – 11 straight deflationary months. The 2021>2025 inflation surge generated 92% of the 25.0% inflation since 2019. Inflation began for Pet Food in June 2021.
  • Food at Home – Prices are up +0.1% from January, but the YOY increase stayed stable at 1.9%. This is radically lower than Jul>Sep 2022 when it exceeded 13%. The 28.6% Inflation for this category since 2019 is 9% more than the national CPI but only in 5th place behind 3 Services expenditures (2 Pet) and Total Pet. 81.1% 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 -0.7% from January and YOY pricing flipped to -1.0% from +0.6%. 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 116% of the total price increase since 2019. Prices set a record in October 2022 then deflated. 3 monthly increases pushed them to a record high in Feb 23. Prices fell in March, rose Apr/May (record), 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
  • Veterinary Services– Prices are +2.3% from Jan (biggest lift since 2.5% in Mar 23) and +8.1% from 24, up from 6.6%. They are #1 in inflation vs 24 and still the leader since 2019 with +47.3% and since 2021, +35.3%. 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 75% 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 +0.3% from Jan, and inflation vs last year rose to +3.0% from +2.7%. Medical Services are not a big part of the current surge as only 49.2% of the 18.1%, 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 4.4% and they fell to #3 in YOY inflation. However, 80.9% of their total 19>25 inflation is from 21>25. In Dec 23, it was 49%.
  • Haircuts/Other Personal Services – Prices are +0.4% from Jan and +4.7% from Feb 24. 12 of the last 14 months have been 4.0+%. Inflation has been pretty consistent. 65.0% of the 19>25 inflation happened 21>25.
  • Total Pet– Petflation rose to 2.4% from 2.0%. 2 segments had a higher rate and 2 were lower. It is 31% less than the 23>24 rate and 14% below the U.S. CPI. Plus, 2.4% is 22.6% below the 3.1% average February rate since 1997. Feb prices rose 0.8%, driven by Vet & Food. The Jan>Feb increase was expected (all yrs but 2018) but double the 97>24 0.4% average change. Another big factor in the CPI increase was that prices only rose 0.3% in Jan>Feb 24. After a strong December & January, February may be another pause in the long recovery.

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. 21>22 has the highest rate for Pet Supplies and the National CPI. The average national inflation in the 6 years since 2019 is 4.0%. Only 3 of the categories are below that rate – Medical Services (2.8%), Pet Supplies (1.9%) and now Pet Food (3.8%). 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 2.9%, only down 6% from 23>24, but it is down 53% from 22>23, 62% less than 21>22 and 27.5% below the average increase from 2019>2025. However, it’s still 61% more than the average increase from 2018>2020. 82% of the 26.2% inflation since 2019 occurred from 2021>25. Inflation is a big problem that started recently.
  • Pet Food – Ytd prices are still deflated -0.3%, but up from -1.1% in Jan. That’s a big change from 3.7% in 23>24, 15.1% in 22>23 and the 2.1% 2018>20 average. However, it is still higher than the -0.7% 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 2022 and especially in 2023. 91% of the inflation since 2019 occurred from 2021>25.
  • Food at Home – The inflation rate is up from 23>24 but at 1.9%, it is down 82% from 22>23, 76% from 21>22 and 47% from 20>21. However, it is more than double the average rate from 2018>20. It is only tied for 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, then fell Jan>Feb. Currently, 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 11.9% from 2019 but 113% of this lift happened from 21>25. Prices are up 13.5% 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, +7.3%, 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 1.6 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. 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 4.9% is 2nd to Veterinary on the chart. It is only their 4th highest rate but is 1.7 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 4.6%, 18% below its 21 peak, but 39% 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 2.2%, up from 2.0% in Jan, but it is 80% less than 22>23 and even 3% lower than the 2018>21 average rate. Plus, it is 24% below the CPI. Despite the YOY lift in February, Petflation is still low. This was primarily driven by Ytd deflation in Pet Products and lower inflation in Services, while Veterinary continues to reach new record highs. The patterns were definitely mixed but the the “need” segments (Food & Vet) drove the small lift.

The Petflation recovery paused in Aug, came back Sep>Oct, paused in Nov, then resumed in Dec>Jan. With a lift to 2.4% from 2.0%, February may be another pause, but the rate is still 23% below the 25 yr monthly average. We tend to focus on monthly YOY inflation while ignoring one critical fact. Inflation is cumulative. Pet prices are 23.6% above 2021 and 28.7% higher than 2019. Those are big lifts. In fact, current prices for Total Pet & Vet are at record highs and the other segments are within 2% of the highest in history. Only Supplies prices (+11.3%) are less than 25% 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 & GPE 24 and now GPE 25, a huge # of exhibitors offer OEM services. Strong, cumulative inflation has a widespread impact.

Retail Channel $ Update – December Monthly & January Advance

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In January, YOY Commodities’ inflation rose to 0.8% from 0.3%. Even with a low inflation rate, high cumulative inflation vs 21 can still impact consumer spending and slow $ales growth.  We saw some evidence of this in January. Total Retail $ were +4.81% vs 24, 0.9% above the average 92>24 lift but Relevant Retail was +4.0%, -15.5% below the January average. The situation is mixed and complex and there is still a long road to full recovery. 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 December Monthly Report and then go to the January 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: December Ytd data = Year-End, Annual Numbers & January monthly data = 2025 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 December Monthly. Only Relevant & Total were up from November and there were 3 actual sales drops –  all in Gas Stations. We should note: Gas Stations are still selling less product than in 2019. Also, Relevant Retail is all positive again. They have been all positive in 10 of the last 13 months and now in 6 of the last 7. ($ are Not Seasonally Adjusted)

The December Monthly is $4.9B more than the Advance report. Restaurants: +$0.9B; Auto: -$0.1B; Gas Stations: +$0.3B Relevant Retail: +$3.7B. Relevant Retail was the driver in the $ales lift vs November, but only Gas Stations were down. A Nov>Dec increase in Total Retail  has happened every year since 1992. However, the 8.6% lift was 41% below average. There were 3 drops in actual sales – Monthly vs 23 & 21 and Ytd vs 23 for Gas Stations. There were 3 “real” sales drops, 1 more than November. All but Gas Stations & Restaurants 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 51% of their growth is real.

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

Overall– 10 of 11 were up from November. Vs Dec 23, 10 were actually and “really” up. Vs Dec 21, 6 were up but only 5 were real increases. Vs 2019, All were actually up and only Off/Gift/Souv and Disc Dept Stores were 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 9.3% from 2021 and 21.5% from 2019 which is having an impact. Sales vs November were -9.4% for HomeCtr/Hdwe but +5.5% for Farm Stores. Vs other years, HomeCtr/Hdwe are only actually & really down vs Dec 23, but Farm stores are actually and really down in all comparisons but vs Dec 23 & 2019. Only 27% of the Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.6%, Real: 1.5%; Farm: 6.5%, Real: 2.4%
  • 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 3.6 times higher than the rate for Drug/Med products. Drug Stores are positive in all measurements and 67% of their 2019>24 growth is real. Supermarkets’ actual $ are up in all measurements and they are only “really” down vs 2021. However, only 6.5% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.3%, Real: +0.4%; Drug Stores: +5.4%, Real: +3.8%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 41% from November but their only other positives are vs Dec 23 & Ytd vs 19. Prices are still deflating, -2.0% vs 23. 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 61% of their 34.5% lift since 19 is real. Avg 19>24 Growth Rate is: +6.1%; Real: +3.9%.
  • Gen Mdse Stores – All actual & real sales were up for Club/SupCtrs & $ stores. However, even with an 28.0% increase from November, Discount Dept Stores were only actually up vs 19. All of their real measurements are negative so none of their growth since 2019 is real. The other channels average 44% in real growth. Avg 19>24 Growth: SupCtr/Club: 6.0%, Real: 2.8%; $/Value Strs: +6.4%, Real: +3.2%; Disc. Dept. Strs: +1.2%, Real: -0.8%.
  • Office, Gift & Souvenir Stores – After a big drop in November, Sales rose 38.8% in December. They are only actually up vs Dec 23 & Ytd vs 19 and all of their real sales numbers, but vs Dec 23 are negative. Their recovery started late, and their progress slowed but may be restarting again. Avg Growth Rate: +0.003%, Real: -1.9%
  • Internet/Mail Order – Sales are +13.9% from November and set a new monthly record of $147.7B. All measurements are positive, but their Ytd growth, +10.3%, is still only 66% of their average since 2019. However, 82.0% of their 106.7% growth since 2019 is real. Avg Growth: +15.6%, Real: +13.4%. 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, then rose in Dec. All measurements are again positive and they are in 2nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 73% of their 53.2% growth since 2019 is real. Average 19>24 Growth: +8.9%, Real: +6.8%

December had its usual lift vs November, but the Relative Retail lift was -43% below avg. However, 10 small channels were up. The YOY lift was avg for Total, but 20% above avg for Relevant. Also, 10 smaller channels and 4 of 5 big groups were up. Prices are still deflating in 7 channels, but cumulative inflation is impacting $ as only 5 channels were really up vs Dec 21. The Retail Recovery is still slow. The December commodities CPI was 0.3% but rose to 0.8% in January. Let’s see if it impacts Retail.

Dec>Jan sales were down for all. A Dec>Jan Total Retail decrease has happened every year since 1992 but the  -16.5% drop is -23% less than average. All YOY $ comparisons are positive for the first time since Jan 23. The Total Retail lift of 4.8% vs January 24 was 0.9% above their 92>24 average but the Relevant Retail lift vs Jan 24 was -15.5% below average. The Gas Station lift was also below average (-54%). However, the YOY lifts for Restaurants (+24% vs avg ) & Auto (+47% vs avg) were both significantly above average. Inflation is still a factor. The CPI for all commodities rose to 0.8% but it is 18.5% vs 21. The inflation surge was just beginning back then. There is some other “real” news. Only 2 measurements were “really” down. In December, there were 3 but back in September there were 5. All but Gas Stations were YOY all positive. After 2 months with a negative, Relevant Retail has now been all positive in 8 of the last 9 months.

Overall – Inflation Reality – For Total Retail, inflation rose to +0.8% but YOY sales grew 4.8% vs 24. For Restaurants, inflation remains high, +3.3% but their sales rose 6.9% vs 24. Gas prices rose and that group is still in turmoil. Auto prices stopped deflating but their sales grew +6.8% vs Jan 24 and they are again all positive. Inflation remained stable at 0.5% for Relevant Retail and YOY sales are still all positive. Their slow progress continues.

Total Retail – Since June 20, every month but April 23 & June 24 has set a monthly sales 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 June, up Jul>Aug, down in Sep, up in Oct>Jan 25. Prices are now +0.8% but YOY sales are up 0.9% above the 92>24 average. The lift is still -27% below the 19>25 avg. but now 50.9% of the 19>25 growth is real, up from 39.1%. Low inflation is helping but cumulative inflation is still having an impact. Growth: 24>25: 4.8%; 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. January $ are up vs 24 and they have the biggest lifts vs 23, 21 & 19. Inflation slowed to 3.3% in January but is still +24.6% vs 21 and +29.8% vs 19. Their 6.9% YOY lift is 24% above their 92>24 avg but -16% below 19>25. Plus, just 39.2% of their 60.9% growth since 2019 is real and they remain 3rd in performance behind Relevant & Total Retail. Recovery started late but inflation started early. Growth: 6.9%; Avg 19>25:+8.2%, Real: +3.6%. 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, then grew in Dec>Jan 25. Jan $ were +6.8% vs 24, 47% above avg & 10% above 19>25. All comparisons are positive, but only 34.1% of 19>25 growth is real. Growth: 6.8%; Avg 19>25: +6.2%, Real: +2.3%

Gas Stations – Gas Stations were hit hard by “stay at home”. They started to recover 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, then rose in Jan. In Jan, actual $ are up in all comparisons vs 24, 21 & 19. Real sales are down vs 21 & 19. Their Jan lift is -54% below avg and -47% below 19>25.  Growth: 2.4%; Avg 19>25: +4.5%, Real: -0.8%. They show the cumulative impact of inflation and how 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 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 in Jan>Feb 24, rose in Mar, fell in Apr, rose in May, fell in June, rose Jul>Aug, fell Sep, then rose Oct>Jan 25. The Jan 4.0% YOY lift is -15.5% below their 92>24 avg and -39% below 19>25. However, 55% of their 47.0% 19>24 growth is real – #1 in performance. Growth: 4.0%; Avg 19>25: +6.6%, Real: +3.9%. In 2024 their inflation rate dropped from 3.2% to 0.1% and stabilized at 0.5% Dec>Jan but its cumulative impact continues to slow growth. We see this in January. We’ll see what happens in the upcoming months.

In 24>25 inflation has slowed, but its cumulative effect has produced a mixed bag. Actual sales comparisons for all big groups are all positive for the 1st time since Jan 23. In January, there were only 2 real drops – both from Gas Stations. In YOY lifts Total Retail’s Jan 4.8% lift was +0.9% above avg. Restaurants were +24% & Auto +47% vs avg. Gas Stations were -54% vs avg and Relevant Retail’s was -15.5% below avg. All $ comparisons – actual & real are positive for all but Gas Stations. (now 8 of 9 months for Rel. Rtl) Overall, January was pretty good. The slow recovery continues.

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

  • Relevant Retail: Growth: +4.0%; Avg: +6.6%, Real: +3.9%. 11 were down from Dec. Vs Jan 24: 10 were up, Real: 10, Vs Jan 21: 10 were up, Real: 6. Vs 19: Only Dept Stores were really down.
  • All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are -44.4% from December but only their real numbers vs 21 & 19 are negative. Their Jan 1.4% is much more than the -0.4% avg. and it is 2.3 times bigger than the 19>25 avg.  Growth: 1.4%; Avg 19>25: 0.6%, Real: -0.9%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are -21.2% from Dec, but they are positive in all measurements. However, only 50% of their 39.9% 19>25 lift is real. Their 5.8% lift is -30% below their 92>24 avg. but equal to 19>25. Growth: 5.8%; Avg 19>25: +5.8%, Real: +3.1%.
  • Grocery- These stores depend on frequent purchases, so their changes are usually less radical. Actual $ are -3.1% from Dec but positive in all comparisons. However cumulative inflation has hit them hard. Real $ are down vs 21 and only 10% of 19>25 growth is real. Their 5.2% lift is 66% above avg & +6% vs 19>25. Growth: 5.2%; Avg 19>25: +4.9%, Real: +0.5%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are -11.3% from Dec but they are positive in all comparisons. Inflation has been relatively low so 63% of their 31.9% 19>25 growth is real. Their YOY lift is -11% below avg and -2% below 19>25. Growth: 4.6%; Avg 19>25: +4.7%, Real: +3.1%
  • Clothing and Accessories – Clothes mattered less when you stayed home. That changed in March 2021 with strong growth through 2022. Sales are -51.8% from Dec but all sales comparisons are positive. 54% of their 19>24 growth is real. Their 3.6% YOY lift is 7% above avg but only equal to 19>25.  Growth: 3.6%; Avg 19>25: +3.6%, Real:+2.7%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are still deflating but they were high in 22. Sales are -16.8% from Dec but only really negative vs 21. However, only 28% of their 19>25 growth is real. YOY lift: 58% above avg & 73% above 19>25. Growth: 5.2%; Avg 19>25: +3.0%, Real: +0.9%
  • 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 -31.6% from Dec but they are now positive in all comparisons. They have had strong deflation and their 25 growth is only 0.2%, -90% below avg, but more than 19>25 (0%). Growth: 0.2%; Avg 19>25: +0.0%, 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, but sales are -10.2% from Dec. Actual sales are all positive and Real sales are only down vs 21, but just 5% of their 19>25 sales growth is real. Their 24>25 sales lift is -84% below avg and -81% below 19>25. Growth: 0.7%; Avg 19>25: +3.6%, Real: +0.2%.
  • 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 but $ are -43.6% from Dec and only actual and real sales vs 19 are positive. However, 77% of their 19>25 growth is real. Sales are  -4.3% vs 24. Their 92>24 avg Jan lift is 2.9%. 19>25 is 3.4%. Growth: -4.3%; Avg 19>25: +3.4%, Real: +2.6%.
  • 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 -14.8% vs Dec but positive in all comparisons. They are 2nd in the % increases vs 19 & vs 21. 74.3% of their 51.3% 19>25 growth is real. Their 6.6% YOY lift is 52% above their 92>24 avg, but -7% below 19>25. Growth: +6.6%; Avg 19>25: +7.1%, 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 -23.3% from Dec. Their YOY lift is -60% below their avg and -71% below 19>25. They are positive in all comparisons and 83% of their 111.6% 19>25 growth is real. Growth: 3.8%; Avg 19>25: +13.3%, Real: +11.6%.

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 7 channels are currently deflating. Any deflation should help the Retail Situation. As expected, $ fell from December for all 11 channels but the -21.5% drop for Relevant Retail was 25% less than avg. Their 4.0% lift vs Jan 24 was 15.5% below avg, but 10 of 11 smaller channels had a $ increase and sold more product. 5 of those lifts were above avg. Perhaps the best news is that all big groups & 10 smaller channels were positive in all actual sales comparisons. Factoring inflation into the numbers, 4 big groups and 6 channels were “all positive”. Relevant Retail has now been all positive in 8 of the last 9 months. The biggest negative is the smaller lift by Relevant Retail. However, it is primarily being driven by a few larger channels – NonStore, SuprCtr/Clubs/$ & Bldg Matl/Farm. Overall, January sales were much lower than December, but the performance shows that the recovery continues.

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)

Here are some answers to some obvious questions. ALSO NOTE: 4 of the 8 January “pinks” are just slowed deflation

  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.

Petflation 2025 – January Update: Stable at +2.0% 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. Prices fell -0.1% in Nov, but rose 0.04% in Dec and 0.7% in Jan 25. The CPI rose to +3.0% from +2.9% in December. Grocery prices rose 0.8% from December but YOY inflation only grew from 1.8% to 1.9%. After 12 months of 10+% YOY monthly increases, grocery inflation has now been below 10% for 23 months. 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>Jan 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 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 (Note: January = YTD, so there will be no separate YTD report this month.)
    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 Jan 23 to Jan 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 January, Pet prices were up 0.4% from December. Food (+0.5%) & Vet (+0.3%) were up while Supplies (-0.2%) & Services (-0.1%) were down.

In Jan 23, the CPI was +16.4% and Pet was +16.8%. 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 Products 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 Pet 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. In Oct, Services drove a lift. In Nov, all were up. In Dec, Total Pet fell. In Jan, the segments were split but Total Pet prices hit a record high.

  • 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>Jan to a record high but 28.8% of the increase since Dec 19 happened from Jan>Jun 22 – 10% of the time.
  • Pet Food – Prices were at the Dec 19 level from Apr 20>Sep 21. They grew & peaked May 23. Jun>Aug ↓, Sep>Nov↑, Dec>Feb↓, Mar↑, Apr>May↓, June↑, Jul>Oct↓, Nov↑, Dec↓, Jan 25↑. 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, beating 2009. 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↑, Mar/Apr↓, May/Jun↑, July↓, Aug↑, Sep/Oct↓, Nov/Dec↑, Jan 25↓.
  • 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>Jan 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, grew Feb>May, fell Jun>Jul, grew Aug>Jan 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 March 24 to a record high. Prices fell in April, rose May>June (record), fell Jul>Sep, rose Oct>Nov, fell in Dec, then rose in Jan 25 (record high).

Next, 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>25 & 19>25. Petflation was stable at 2.0% in January and it is again below the National inflation rate (by -33.3%). 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 0.7% from December and were +3.0% vs Jan 24, up from +2.9% last month. Grocery inflation rose to +1.9% from 1.8%. Only 2 expenditures had price decreases from last month – both Pet: Supplies & Services. There were 2 drops in Oct/Nov but 3 in Aug/Sep & Dec and 5 in July. The national YOY monthly CPI rate of 3.0% is up from 2.9%, but it is  3% below the 23>24 rate and 60% less than 21>22. The 24>25 rate is above 23>24 for 5 – Groceries, Pet Supplies, Med. Services, Pet Services & Haircuts. In our 2021>2025 measurement you also can see that over 80% of the cumulative inflation since 2019 has occurred in 6 segments, 4 are Pet – all but Vet, plus Groceries & the CPI. Except for Pet Services, where prices have surged, Service Segments have 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 95% 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 +4.2% while the CPI for Commodities is 0.8%. This clearly shows that Services are driving almost all of the current 3.0% inflation. The situation in Pet is even worse. Petflation: 2.0%. The CPI for the 2 Service Segments is 5.9%. The Pet Products CPI is -0.7%.

  • U.S. CPI– Prices are +0.7% from Dec. The YOY increase is 3.0%, up from 2.9%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are now 50+% higher than the target. The January increase was the 4th straight lift after 6 consecutive drops from Apr>Sep. The current rate is below 23>24 but the 21>25 rate is still +21.4%, 81.7% of the total inflation since 2019. The Inflation surge hadn’t started in January 2021, +1.4%
  • Pet Food– Prices are +0.5% vs Dec. but -1.1% vs Jan 24, up from -1.7%. They are still far below the Food at Home inflation rate of +1.9%. The YOY drop of -1.1% is being measured against a time when prices were 20.0% above the 2019 level but the current decrease is still more than double the -0.5% drop from 2020 to 2021. The 2021>2025 inflation surge generated 90% of the 25.1% inflation since 2019. Inflation began in June 2021.
  • Food at Home – Prices are up +0.8% from December but the YOY increase only grew from 1.8% to 1.9%. This is radically lower than Jul>Sep 2022 when it exceeded 13%. The 28.8% Inflation for this category since 2019 is 10% more than the national CPI but only in 4th place behind 3 Services expenditures (2 Pet). 81% of the inflation since 2019 occurred from 2021>25. This is lower than 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 tsunami.
  • Pets & Supplies– Prices were -0.2% from December and YOY inflation fell to +0.6% from 1.5%. 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 111% of the total price increase since 2019. Prices set a record in October 2022 then deflated. 3 monthly increases pushed them to a record high in Feb 23. Prices fell in March, rose Apr/May (record), fell Jun>Aug, grew Sep>Oct, fell Nov, grew Dec>Feb 24, fell Mar>Apr, rose May>Jun (record), fell July, rose Aug, fell Sep>Oct, rose Nov>Dec, fell in Jan 25.
  • Veterinary Services– Prices are +0.3% from December and +6.6% from 2024, up from 6.2% last month. They are now #1 in inflation vs 24 and still the leader in the increase since 2019 with +45.5% and since 2021, +33.0%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & 24. It also has the highest rate in 25, but only 72.0% 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 +0.3% from December, but inflation vs last year slowed to +2.7% from +3.4%. Medical Services are not a big part of the current surge as only 50.8% of the 18.3%, 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>Jan 25. In Jaanuary, their rate plummeted from 11.5% to 5.5% and they fell from #1 to #2 in YOY inflation. However, 81.2% of their total 19>25 inflation has occurred since 21. In Dec 23, it was 49%.
  • Haircuts/Other Personal Services – Prices are +0.5% from Dec and +4.6% from Jan 24. 11 of the last 13 months have been 4.0+%. Inflation has been pretty consistent. 64.7% of the 19>25 inflation happened 21>25, 66.7% of the time.
  • Total Pet– Petflation was unchanged at 2.0%. 2 segments had a higher rate and 2 were lower. It is 57% less than the 23>24 rate and 33% below the U.S. CPI. Plus, 2.0% is 35.5% below the 3.1% average January rate since 1997. Jan prices rose 4%, driven by Food & Vet. The Dec>Jan increase was equal to the 97>24 average change and expected. A drop has only occurred in 2 of the last 27 years. The big factor in the CPI stability was that prices also rose 0.4% in Dec>Jan 24. In January, the recovery continued, and we are getting closer to a full recovery.

The Petflation recovery paused in August  24, came back Sep>Oct, paused in November, then resumed in Dec>Jan 25. At 2.0%, January was 35.5% below the 27 yr 97>24 average. We tend to focus on the monthly YOY inflation in the current year and forget that what happened last year is a big factor in determining the current inflation rate. In Dec>Jan, Pet prices rose 0.4% but the YOY rate was stable at 2.0%… because prices also rose 0.4% in 2024. We also ignore the fact that inflation is cumulative. Pet prices are 23.3% above 2021 and 28.6% higher than 2019. Those are big lifts. In fact, January prices reached a record high for Veterinary and Total Pet. All other segments are within 1.5% of the highest price in history. Only Supplies prices (+12.3%) are less than 25.1% 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 the segment most  driven by high income CUs. Veterinary will likely continue to see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies are more discretionary so we will likely see a reduction in purchase frequency. In Pet Food, the most needed segment, some Pet Parents may even downgrade their Pet Food. However, the biggest impact in both product segments will be a strong movement to online purchasing and private label. We saw proof of this at both GPE 24 & SZ 24 as a huge # of exhibitors offer OEM services. At GPE 25, this trend will continue. Strong, cumulative inflation has a widespread impact.

2023 Veterinary Spending was $35.66B – Where did it come from…?

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Now we will turn to Veterinary Services. For years, Veterinary Services have had high inflation. This has resulted in CU income becoming the dominant factor in spending and a reduction in visit frequency.

In 2017 low inflation drove a 7.2% increase in visit frequency and a $2.5B spending lift. In 2018 inflation returned to normal. Consumers spent $0.56B more (+2.7%), but inflation was 2.6% so almost all of the lift was from higher prices. In 2019 the situation got worse. Consumers spent $0.58B (+2.7%) more but inflation was 4.1% so there was a decrease in the amount Vet Services purchased. In 2020 the pandemic hit, and Pet Parents focused on needs – Food & Veterinary. Veterinary spending grew $3.05B, (+14.0%). In 2021, this behavior grew even stronger and produced a record $7.82B (+31.5%) increase. In 2022 inflation reached 8.8%. Spending fell -$2.95B (-9.0%) but the amount of Vet Services sold fell 16.4%. In 2023 inflation was 9.4% but Vet Care is needed so spending grew $5.95B (+20.0%) – with inflation, +9.7%.

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2023 and the $5.95B increase. The first chart details the biggest Veterinary spenders for each of 10 demographic categories. It shows their share of CU’s, share of Veterinary spending and their spending performance (Share of spending/share of CU’s). In terms of performance – 5 groups perform above 120%, the same as 2022, but 1 less than 2018>2021. This is 1 less than Supplies, 2 less than Services (7) but 2 more than Food (3). This means that these big spenders are performing well but it also signals that there is still disparity between the best and worst performing demographics in this “needed” segment. Only the Age & Income groups are different from Total Pet and the categories are listed in the order that reflects their share of Total Pet $pending. Again, High Income is the most important factor in Spending.

  1. Race/Ethnic – White, not Hispanic (84.7%) down from 86.0%. This group accounts for the vast majority of spending in every segment but lost share in Vet $ in 2023. Their 127.6% performance is also down from 128.0% but they grew from #5 to #4 in importance in Veterinary Spending. Only African Americans spent less, -$0.04B (-3.8%). Whites spent $4.64B (+18.2%) more but their share & performance fell because of a $1.24B (58.7%) lift by Hispanics.
  2. # in CU – 2+ people (82.0%) up from 79.8% This group, which is 69.8% of U.S. CUs, gained in share and their performance grew from 115.7% to 117.5%. Their rank in importance in Vet Spending moved from #8 to #7. All but 4 People spent more. The gains happened because Singles had a much smaller lift (+7.0%) than 2+ CUs (+23.3%).
  3. Housing – Homeowners (81.2%) down from 83.9% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 124.8% performance rating is down from 128.9%, and they dropped to 5th from 4th place. All segments increased spending. Renters were +39.7% while Homeowners were +16.2%. This produced the drops in share & performance for Homeowners. We should also note that Homeownership is definitely not as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
  4. Age – 35>64 (60.8%) down from 61.1% Their performance also fell from 117.1% to 116.7% and they fell to 8th from 6th place in importance. All ages spent more but 45>54 was only +0.2% while <25 was +190.1%. These were big factors in the group’s small drops in share and performance.
  5. Area – Suburban & Rural (69.3%) down from 70.9% Suburban CU’s are the biggest spenders in every segment. All areas spent more. Center City had the biggest % increase, +27.2%, while Rural was only up +6.0%. This drove the drop in share and caused their performance to fall to 106.0%, from 108.2%. They’re still last in importance.
  6. Income – Over $100K (61.1%) up from 57.0% Their performance also grew from 160.8% to 167.7%. Higher income is still the most important factor in Veterinary spending. The only drops were from <$30K, -$1.11B and $50>69K,  -$0.10B. The $100K> groups spent $4.85B more. This caused he big lifts in share and performance.
  7. # Earners – “Everyone Works” (69.2%) up from 67.7% Their Performance also grew from 116.1% to 118.0%. They moved up from #7 to #6 in importance. Only No Earner, Singles spent less. 3+ Earners were only +$0.05B but 2 Earners & 1 Earner, Singles spent $4.56B more. They drove the group’s lifts.
  8. Occupation – All Wage & Salaried (68.6%) up from 65.9% and their performance increased from 109.3% to 112.6%. In the group, only Blue Collar spent less. Outside the group, Self-employed & A/O, Unemployed spent less. White Collar workers spent $5.32B, +35.6% more. They drove the lifts in share in performance. We should also note that their perfomance lift was slowed a little because they had 1.1 million more CUs than in 2022.
  9. CU Composition – Married Couples (61.5%) down from 62.5% Their performance also fell to 127.7% from 130.8% and they moved down to #3 from #2 in importance. Only Married, Oldest Child 18> & Single Parents spent less. The drops in share and performance were due to big lifts by Singles & Unmarried, All Adult CUs.
  10. Education – College Grads (64.9%) up from 60.9%. Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Their performance also increased from 130.3% to 135.8% and they moved up from #3 to #2 in importance. Only HS Grads or less spent less in 2023. College grads (47.8% of CUs) generated 84.7% of the 22>23 lift and 100% of the big increases in share and performance.

Spending disparity rose in 5 categories and fell in 5 categories. The average group performance was 125.4%, up from 123.2% in 2022 so spending became slightly less balanced. Notably, higher income & education became a little more important. In fact, a College Degree rose to #2 in importance.

Now, we’ll look at 2023’s best and worst performing Veterinary spending segments in each category.

There are no surprising winners or losers but 9 are different from 2022, up from 4 last year. This is 5 more than Services, and 1 more than Supplies but 2 less than the 11 in Food. Also, the average difference between Best & Worst was 89.8%, a little more than 88.8% in 2022. There was considerable turmoil, but it was evenly divided so the change in spending disparity between segments in 2023 was minimal. The changes from 2022 are “boxed”. We should note:

  • Income– The Winner & Loser are the same. The gap is 175.0% but 6.8% less than 2022.
  • Earners – 2 Earners replaced 3+ Earners on top but the gap widened by 3.8%.
  • Occupation – Blue Collar replaced Service Workers at the bottom and the gap widened a lot, +32.3%.
  • Age – 55>64 replaced 45>54 yr-olds and 75+ replaced <25. The gap actually narrowed by an incredible -42.0%.
  • Race/Ethnic; Another set of expected repeats. The gap between winner and loser widened by 6.2%
  • Education; Housing; Area – These all had an expected repeat winner & loser, but the performance gap change for Education was very different. Education: +33.3%; Housing: -15.0%; Area: -19.2%.
  • Region – West replaced Midwest at the top. The South has now finished last for 8 years in a row, but the win/lose gap increased by 12.2%. Also, 3 regions performed at 100+%. That hasn’t happened since 2018.
  • CU Composition – Couple Only replaced Child 18> & Single Parents replaced Child <6. The gap widened +14.8%.
  • # in CU – 3 People replaced 4 on top and the gap grew by +5.3%. Only 2 & 3 people CUs perform above 100%.
  • Generation – Born <1946 replaced Gen Z at the bottom and the performance gap narrowed by -13.4%.

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

We saw some turmoil in performance. It continues here. There was 1 repeat, and 13  segments flipped from 1st to last or vice versa. Last year there were 3 repeats and 14 flips. There were no truly surprising winners and there was only 1 surprising loser – the high income, 45>54 yr olds. In 2023 there were 4 categories in which all segments spent more. In 2022, there were 3 where all spent less. Plus, in 2022, only 23% of 96 demographic segments spent more. In 2023, that grew to 82.3%. If you consider 9.4% inflation, 67.7% still spent more.

  • Race/Ethnic – The winner and loser flipped.
    • Winner – White, Not Hispanic– Veterinary: $30.19B; Up $4.64B (+18.2%)                                            2022: African Americans
    • Loser – African Americans – Veterinary: $1.13B; Down $0.04B (-3.8%)                                                   2022: White, Not Hispanic
    • Comment– African American were the only group that spent less and the drop was small. Hispanics spent $1.24B, +58.7% more after a $1.12B drop in 2022. Asian Americans also spent a little more, $0.11B, +12.3%. That’s 4 consecutive years of increases for this group with a low level of pet ownership – very encouraging.
  • Occupation – The winner and loser both flipped back to more “normal” positions.
    • Winner – Mgrs & Professionals – Vet Spending: $14.77B; Up $4.10B (+38.4%)                                    2022: Blue Collar
    • Loser – Blue Collar – Vet Spending: $1.36B; Down $0.56B (-29.2%)                                                         2022: Mgrs & Professionals
    • Comment – All Other/Unemployed & Self-Employed also spent less. We should also note that Retired had the 2nd largest lift, both in $ and percentage, +$1.66B, +31.6%.
  • Education – Adv. College degree flipped to the top. HS Grads replaced them at the bottom.
    • Winner – Adv. College Degree – Veterinary Spending: $11.85B; Up $3.79B (+47.1%)                           2022: <HS Grads
    • Loser – HS Grads – Veterinary Spending: $2.70B; Down $0.35B (-11.5%)                                                 2022: Adv College Degree
    • Comment – In 2023, only HS Grads or less had spending decreases. < College still spent $0.90B more in 2023, almost triple their 2022 lift. However, the big turnaround was in College Graduates. In 2022 they spent -$3.27B less than in 2021. In 2023 they spent $5.04B, +27.8% more. 85% of the Vet $ lift came from 48% of the CUs.
  • # Earners – The winner and loser both flipped.
    • Winner – 2 Earners – Veterinary Spending: $15.69B; Up $3.49B (+28.6%)                                              2022: No Earner, Single
    • Loser – No Earner, Single – Veterinary Spending: $1.79B; Down $0.65B (-26.7%)                                 2022: 2 Earners
    • Comment – No Earner, Singles had the only decrease, but No Earner, 2+ CUs spent $1.04B more. Interestingly, the highest income segment, 3+ Earners had the smallest lift, +$0.05B, +1.2%.
  • # in CU – 2 People flipped to the top and 4 People replaced them on the bottom.
    • Winner – 2 People – Veterinary Spending: $15.13B; Up $3.20B (+26.8%)                                                 2022: 3 People
    • Loser – 4 People – Veterinary Spending: $4.29B; Down $0.49B (-10.3%)                                                  2022: 2 People
    • Comment: In 2022, all groups spent less. In 2023, only 4 People CUs spent less. The 22>23 lift was definitely concentrated as 2 & 3 People CUs (47.7% of CUs) produced 88.4% of the lift, +$5.26B.
  • Area Type – Suburbs 2500> flipped from last to 1st and Rural replaced them at the bottom.
    • Winner – Suburbs 2500> – Veterinary Spending: $17.21B; Up $3.17B (+22.6%)                                    2022: Center City
    • Loser – Rural – Veterinary Spending: $7.48B; Up $0.43B (+6.0%)                                                              2022: Suburbs 2500>
    • Comment – In 2020 & 2021 all groups spent more. In 2022, all spent less. In 2023, all spent more again. Since 2020, all segments have the same spending pattern. Center City settled into 2nd place after flipping for 3 straight years. The Suburbs 2500> have the biggest share of Vet $, 48.3% and generated 53.3% of the lift.
  • CU Composition – The winner & loser are again both new.
    • Winner – Married, Couple Only – Veterinary: $11.17B; Up $2.30B (+26.0%)                                       2022: Married, Child 6>17
    • Loser – Married, Child 18> – Veterinary: $2.79B; Down $0.49B (-14.9%)                                               2022: Unmarried, 2+ Adults
    • Comment – Single Parents also spent less. 2023 favored CUs with no children. Married, Couple only had the biggest lift and 2nd place went to Unmarried, 2+ All Adult CUs, +$2.18B, +50.9%.
  • Region – The Midwest flipped to the bottom and the West replaced them on top. This ends 5 yrs of Northeast flips.
    • Winner – West – Veterinary Spending: $10.32B; Up $2.30B (+28.6%)                                                     2022: Midwest
    • Loser – Midwest – Veterinary Spending: $7.93B; Up $0.31B (+4.1%)                                                        2022: Northeast
    • Comment – All Regions spent more. In 2022, only the Midwest increased spending.
  • Generation – Both winner & loser are new. (CU Comp was the only other category with a new winner & loser.)
    • Winner – Baby Boomers – Veterinary: $11.94B; Up $2.21B (+22.7%)                                                     2022: Gen X
    • Loser – Born <1946 – Veterinary: $1.38B; Down $0.44B (-24.0%)                                                             2022: Millennials
    • Comments – Only the oldest group spent less. In 2022, Millennials had the biggest drop. In 2023 they finished a close 2nd to the Boomers, +$2.09B, +29.3%. In 2022, Gen Z “got on board” in every aspect of Pet Parenting, including an +80.9% increase in Veterinary $. In 2023 their commitment continued to grow as Vet $ were +133%.
  • Housing – Homeowners w/Mtges stayed on top while those w/o Mtges replaced Renters at the bottom.
    • Winner – Homeowner w/Mtge – Veterinary: $19.11B; Up $2.21B (+13.1%)                                          2022: Homeowner w/Mtge
    • Loser – Homeowner w/o Mtge – Veterinary$: $86B; Up $1.83B (+22.9%)                                             2022: Renter
    • Comment – In 2023, all spent more. In 2022, all spent less but Renters had the only drop over -$1B. From 2020>2023: Homeowners w/Mtges are +$5.05B (+35.9%); Homeowners w/o Mtges are +$3.27B (+49.6%); Renters are +$2.51B (+59.9%). That’s strong, widespread growth in this category.
  • Age – Both winner and loser flipped. That’s the 2nd consecutive flip for 55>64.
    • Winner – 55>64 yrs – Veterinary Spending: $8.29B; Up $2.15B (+35.0%)                                             2022: 45>54 yrs
    • Loser – 45>54 yrs – Veterinary Spending: $6.91B; Up $0.01B (+0.2%)                                                    2022: 55>64 yrs
    • Comment: All segments spent more. The lift for 45>54 was virtually no gain. In 2022 the spending skewed a little older. In 2023, it also skewed older, but the lift was pretty evenly divided by the 45>54 age group. Segments below 45 yrs old spent $2.70B more (46% of the lift). Those 55> spent $3.23B more (54% of the lift).
  • Income – $150>199K flipped to the top and <$30K replaced them at the bottom.
    • Winner – $150>199K – Veterinary Spending: $5.35B; Up $1.92B (+55.9%)                                           2022: $200K>
    • Loser – <$30K – Veterinary Spending: $1.97B; Down $1.11B (-35.9%)                                                    2022: $150>199K
    • Comment – Only the <$30K & $50>69K groups spent less. All groups $70K> had $1B increases so they were close to winning. Their increases were 21+% and generated 108% of the $5.95B Veterinary lift.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. 2022 had a $2.95B drop. The decrease brought a lot of turmoil in the $ changes. In 2023 there was a huge turnaround as spending rose $5.95B, +20.0%  and reached $35.66B. The big flip in spending caused the  turmoil in $ change to continue. In 2023 only 1 held their spot and 13 flipped from 1st to last or vice versa. In 2022 there were 3 holds and 14 flips – about the same. The biggest difference was that in 2022, only 23% of demographics spent more and there were 3 categories where all spent less. In 2023, 87% spent more and there were 4 categories where all segments had increases. This made the “hidden gems” much easier to find. Here are some segments that didn’t win but helped drive the big lift in Veterinary spending. These groups don’t win an award, but they certainly deserve…

HONORABLE MENTION

Married, Oldest Child <6 are just getting started. They have slightly above average income so the 142% lift in Vet spending shows that they are also committed to their Pet Children. Gen Z “got on board” with Pet Parenting in 2022. With big lifts in all segments, their commitment is growing even stronger in 2023. Hispanics have high pet ownership but low income. In 2022, their Vet spending fell $1B. In 2023, they found the $ for the needed services, +$1.24B. Lower incomes are always challenged by Veterinary high prices but many of the services are necessary for the health of their pets. In 2023, No Earner, 2+ CUs & $70>99K found over $1B more to spend on Vet Services. Renters also have low income, but pet ownership is growing in this segment. They had 30+% increases in the most needed segments – Pet Food & Vet Services.

Summary

In 2020 the pandemic focused Pet Parents on the needed segments. This drove a $3B increase in Veterinary $. Boomers & Millennials led the way, but the lift was widespread as 85% of demographic segments spent more. In 2021 the lift grew to a record $7.82B with 93% of all segments spending more including 9 categories where all segments had increases. In 2022, the “binge” was not repeated. Inflation also increased radically to 8.8% and spending fell -$2.95B (-9.0%). Only 23% of demographics spent more and in 3 categories all segments decreased spending.

In 2023 Inflation grew to 9.4% but the higher income groups stepped up. The $30>49K segments also found the necessary $ so their spending increased. The result was a $5.95B, +20.0% increase as Veterinary Spending reached $35.66B. In 2023, 82.3% of demographics spent more and in 4 categories all segments increased spending. Even considering the 9.4% inflation, 67.7% spent more – a big change from 2022.

The performance of big spending groups is very important in all industry segments. In Veterinary we identified 5 demographic categories with high performing (120+%) large groups. That is the same as 2022. It is 2 more than Pet Food, but 1 less than Supplies & 2 less than Services. The big groups with a high performance level in Veterinary are:

  • Income: $100K> (167.7%) Performance increases with income but doesn’t reach 100+% until income reaches $70K
  • CU Composition: Married Couples (127.7%) Only Married Couples (except Child <6) & All Adult CUs perform at 100+%.
  • Education: College Grads (135.8%) Performance increases with education. All with an Associate’s Degree> are 100+%
  • Housing: Homeowners (124.8%) Only Renters (53.8%) perform below 100%.
  • Race/Ethnic: White, Not Hispanic (127.6%). Hispanics, African Americans & Asians only perform between 25% and 62%

Consumers have no control over Race/Ethnicity but can make decisions in the other categories. Income is still the most important factor. The others are important but essentially equal in performance – 125>136%. Although spending grew, the balance was basically unchanged with again 5 big groups performing over 120%. Another indication of this is that the average spending disparity between the best and worst performing segments only grew from 88.8% to 89.8%. We should note that the 50/50 spending dividing line did increase from $115K to $124K, emphasizing income’s importance.

Perhaps the biggest concern is high inflation. In 2021 spending grew 31.5% in the pandemic surge. Inflation was high at 4.2% but 84% of the growth was real. In 2022 spending fell -9.0%. Inflation was 8.8% so the amount sold was really down -16.4%. Also 77% of 96 demographic segments spent less $ but if we factor inflation into the numbers, 91% actually bought less Veterinary Services. In 2023, inflation reached a record 9.4%. Spending was +20.0% so the “real” increase was 9.7%. If high inflation continues it could have a major impact on Veterinary Spending. We’ll see.

Finally – The “Ultimate” Veterinary Services Spending CU consists of 4 people – a married couple with children. Their oldest child, still at home is under 18. They are 55>64 years old. They are White, but not of Hispanic origin. Both work. At least one of them has an Adv. College Degree and is a Mgr/Professional. Their total income is $200K>. They live in a small suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage on their home.

2023 Pet Services Spending was $13.42B – Where did it come from…?

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Next, we will look at Pet Services. It is still by far the smallest Segment, but like Supplies and Veterinary, it had a record increase in 2021. However, unlike them, there was no $ drop in 2022. The lift grew stronger, up $3.26 (+35.8%). After the great recession, Services’ annual spending slowly but steadily increased. During this time, the number of outlets offering Services strongly grew as brick ‘n mortar retailers looked for a way to combat the growing influence of online outlets. After all, you can buy products, but you can’t get your dog groomed on the Internet. This created a highly price competitive market for Pet Services. In 2017 there was a slight increase in visit frequency, but Pet Parents just paid less. This resulted in a 1.0% decrease in Services spending. In 2018 consumer behavior changed as a significant number decided to take advantage of the increased availability and convenience of Pet Services and spending literally took off, +$1.95B (+28.9%), the biggest increase in history. In 2019 Pet Parents, especially the younger ones, value shopped, and spending turned down $0.10B. In the 2020 pandemic Services outlets were often deemed nonessential and were subject to restrictions and closures which drove a huge drop in $. In 2021 things opened up and Services spending rebounded with 2 consecutive record lifts in 2021 & 2022. In 2023, the growth continued but it slowed, +$1.05B (+8.5%).

Services spending is the most discretionary, but its reach is expanding. Let’s look deeper into the demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2023 and the $1.05B increase. The first chart details the biggest Pet Services spenders for each of 10 demographic categories. It shows their share of CU’s, share of Services spending and their spending performance (Share of spending/share of CU’s). In order to better target the bulk of the spending we had to alter the groups in 4 categories – income, area, age & housing. The performance level should also be noted as 7 of 10 groups have a performance level above 120%. This is 1 more than 2022 and the most for any segment. Supplies has 6. Veterinary and Total Pet have 5 but Food has only 3. This indicates that the disparity between the best and worst performing segments grew a little in 2023 and is still the highest of any segment. Income is still the biggest factor in Services Spending. The categories are presented in the order that reflects their share of Total Pet $ which highlights the differences of the 6 matching groups. For Services, the biggest share ranking differences from Total Pet are that the # of Earners and Education are more important in Services.

  1. Race/Ethnic – White, not Hispanic (84.2%) down from 84.9%. This big group accounts for most of the spending in all segments. Their performance grew from 126.3% to 126.9% but they dropped from 4th to 5th place in importance. Only Hiispanics spent less. Big lifts by the other groups caused the share drop but fewer CUs improved performance.
  2. # in CU – 2+ people (81.4%) up from 80.2% Their performance also increased from 116.0% to 116.7% but they stayed #8 in importance. All sizes spent more. The small lift in share and performance happened because 2+ CUs had a bigger % lift than 1 Person CUs.
  3. Housing – Homeowners w/Mtge (61.3%) up from 56.7%. Homeownership is a big factor in spending in all industry segments. This special group was created because those w/Mtge reached the 60% target. Their performance grew from 148.9% to 162.6% and they moved up from #5 to #2 in importance. Homeowners with and without a mortgage spent more. Renters spent -12.3% less.
  4. Age – 35>64 (64.8%) up from 60.0%. Their performance grew from 115.0% to 124.0%. They re-joined the 120+% club and moved up to #6 from #9 in importance. 25>34 & 65>74 spent less. This concentrated spending in the 35>64 group. Their $1.27B spending lift drove the increases in share & performance and put them in the 120% club.
  5. Area – City/Suburbs >2500 (79.2%) up from 77.8% in share, and performance grew from 96.2% to 97.8%. Again they didn’t earn their share of $pending. Services is an Urban Segment. All Areas spent more but the Suburbs had the biggest lift and drove Share and Performance up. The group’s performance is <100% due to Center City.
  6. Income – $100K> (70.7%) up from 64.2% This group’s performance rating is 194.1%, up from 193.6%. CU income is still by far the most important factor in increased Pet Services Spending. Only the $50>69K, $100>149K & $200K> income groups spent more. At +$1.16B, $200K> was the big driver in the share gain. The peformance increase was small because the number of CUs <$100K fell -4.5% while those $100K> increased by 10.2%.
  7. # Earners – “Everyone Works” (72.5%) up from (72.2%) All adults in the CU are employed. Income is important so a high market share is expected. Their performance dropped to 123.6% from 123.7% and they fell from #6 to #7 in importance. All CUs within the group spent more. Only No Earner, Singles spent less. The slight performance drop was due to an increase in CUs.
  8. Occupation– All Wage & Salary (66.2%) down from 70.3% and their performance rating fell from 116.5% to 108.7%. They dropped fro #7 to #9 in importance. Only Tech/Sales/Clerical and Service Workers spent less on Services in 2023. Managers & Professionals had the biggest $ increase, +$0.18B but it was only +3.3%. Retirees and A/O, Unemployed were +$0.76B. In fact, the Wage Group was only +$0.20B while those outside the group were +$0.85B. This caused the big drops in share and performance.
  9. CU Composition – Married Couples (67.8%) up from 63.6%. Married couples are a big share of $ and have 123+% performance in all segments. Their performance increased to 140.7% from 133.1% but they fell from #3 to #4 in importance in Services spending. Led by Couples Only (+$0.51B), all Married CUs spent more. They were +$1.24B (+15.7%) while Unmarried CUs were -$0.19B. This drove the big lifts in share & peformance.
  10. Education – College Grads (72.7%) up from 69.8%. Income generally increases with education so Services spending grows with increasing education. Performance grew from 149.3% to 152.0% but Education fell from #2 to #3 in importance. Only Assoc Degree spent less but the drop made <College -$0.07B. College Grads were +$1.12B, +13.0%

We changed 4 of the groups for Services – Income, Area, Housing & Age to better target the biggest spenders. We should also note that Income is still more important to spending in Services than in any other segment. In the Big Groups, only Occupation fell in both share and performance. Also, Services now has 7 groups performing at 120+%, up from 6 in 2022. Overall, in 2023 Services spending became less demographically balanced.

Now, we’ll look at 2023’s best and worst performing Pet Services spending segments in each category.

Except for CU Comp & Size, the best & worst performers are not a surprise. There are 4 that are different from 2022, all in the best group, 1 more than last year. CU Comp & Size show the move towards “family” CUs. Income is a big factor for almost all categories. Gen X is still on top, but spending shifted towards their oldest members, 55>64.(and young Boomers) The average difference between Best & Worst is 111.8%, the highest of any segment and up from 100.3% in 2022. Pet Services spending became less balanced in 2023. Changes from 2022 are “boxed”. We should note:

  • Income is even more important to Pet Services. 314.7% is the highest performance by any group in any segment.
  • # Earners – 2 Earners returned to the top but No Earner, Singles stayed on the bottom.
  • Age – 55>64 is a mixture of the oldest Gen Xers & youngest Boomers. They have the 3rd highest income. All groups from 35>64 performed at 100+%. The lowest performers were at both ends of the age spectrum.
  • CU Composition – Married, Oldest child 6>17, the 2021 winner, returned to the top while Single Parents remain firmly entrenched at the bottom.
  • CU Size – The key is having 2 or more people in the CU. 4 People is the current leader but all 2+ CUs perform above 100%. 1 Person CUs Services’ performance is 61.4%.
  • Generation – Gen X retained the Top Spot and Gen Z stayed at the bottom. Both Boomers and Millennials earned their share with 100+% performance. Born <1946 was next to last with 39.1%.

In Pet Services spending performance, income is still the major factor. Spending began skewing younger in 2018. They slipped a little in 2019, but they basically held their ground during the 2020 pandemic. In 2021, Boomers, Millennials and the younger Gen Xers got on board. In 2022 & 2023, spending skewed towards the older Gen Xers.

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

In this chart you immediately see the difference from last year. In 2023 you see a little less stability. There were 7 repeats. In 2022 there were 13. Also, 2 segments flipped from 1st to last or vice versa. In 2022 there were no flips. While 2021 & 2022 had record increases, the lift in 2023 was only $1.05B, +8.5% and less widespread. In 2 categories all segments spent more compared to 9 in 2022. Also, 75% of 96 demographic segments spent more, down from 93% in 2022. Another thing is definitely worse. The biggest drop was -$0.58B. In 2022 it was only -$0.12B.

Here are the specifics:

  • Housing – Both winner and loser are the same as 2022.
    • Winner – Homeowner w/Mtge – Services: $8.23B; Up $1.23B (+17.5%)                                  2022: Homeowner w/Mtge
    • Loser – Renter – Services: $2.08B; Down $0.29B (-12.3%)                                                            2022: Renter
    • Comment – Homeowners w/o Mtges were up $0.12B, +4.0%.
  • Income – $200K> won again but $70>99K replaced $30>39K at the bottom.
    • Winner – $200K> – Pet Services Spending: $4.82B; Up $1.16B (+31.8%)                                   2022: $200K>
    • Loser – $70 to $99K – Pet Services Spending: $1.24B; Down $0.43B (-25.8%)                           2022: $30 to $39K
    • Comment – Only $50>69K, $100>149K & $200K> spent more, but their lifts were substantial, totaling $1.95B. This more than made up for the total drop by the other groups, -$0.90B.
  • Area Type – Suburbs 2500> stayed on top while Rural replaced Center City at the bottom.
    • Winner – Suburbs 2500> – Pet Services Spending: $6.62B; Up $0.90B (+15.7%)                    2022: Suburbs 2500>
    • Loser – Rural – Pet Services Spending: $2.79B; Up $0.04B (+1.5%)                                             2022: Center City
    • Comment – Center City was +2.9% & Rural was +1.5%. All spent more but the Suburbs drove the lift.
  • Race/Ethnic – White, Not Hispanic stayed on top while Hispanics replaced Asians at the bottom.
    • Winner – White, Not Hispanic – Services: $11.30B; Up $0.80B (+7.6%)                                  2022: White, Not Hispanic
    • Loser – Hispanic – Services: $0.92B; Down $0.19B (-16.8%)                                                       2022: Asian
    • Comment– Asian were +$0.29B & African Americans were + $0.15B so Minorities were up $0.26B, +13.7%.
  • Generation – Gen X replaced Boomers on top and Born <1946 replaced Gen Z at the bottom.
    • Winner – Gen X – Services: $4.78B; Up $0.79B (+19.8%)                                                                 2022: Baby Boomers
    • Loser – Born <1946 – Services: $0.44B; Down $0.17B (-28.0%)                                                      2022: Gen Z
    • Comment – In 2022, all generations spent more. In 2023, only Born <1946 spent less. Millennials finished in second place with a $0.29B, +8.7% increase.
  • Age – Both winner and loser are new.
    • Winner – 55>64 yrs – Pet Services Spending: $3.22B; Up $0.68B (+26.5%)                               2022: 65>74 yrs
    • Loser – 25>34 yrs – Pet Services Spending: $1.65B; Down $0.18B (-9.6%)                                   2022: <25 yrs
    • Comment: In 2022 only the <25 group spent less. In 2023, 25>34 & 65>74 had drops. The lift continues to skew a little older, up to 64 but it was actually pretty balanced between the 3 groups from 35>64. They dominate Services spending, 64.7% of the total. Their 22>23 lift was +$1.27B. That’s 121% of the $1.05B lift in Services.
  • # Earners– 2 Earners held their spot at the top while No Earner, Singles replaced No Earner, 2+ CUs at the bottom.
    • Winner – 2 Earners – Pet Services Spending: $6.15B; Up $0.66B (+12.0%)                                2022: 2 Earners
    • Loser – No Earner, Single – Pet Services Spending: $0.60B; Down $0.05B (-7.7%)                   2022: No Earner, 2+ CU
    • Comment – Only No Earner, Singles spent less, but the biggest % lift was from No Earner, 2+ CUs, +26.9%
  • Region – Northeast flipped from last to 1st and the South replaced them at the bottom.
    • Winner – Northeast – Pet Services Spending: $2.53B; Up $0.63B (+33.0%)                               2022: Midwest
    • Loser – South – Pet Services Spending: $3.87B; Down $0.01B (-0.3%)                                          2022: Northeast
    • Comment – In 2021 & 2022, all spent more. In 2023 only the South spent less, and it was a minuscule drop.
  • Education – BA/BS replaced Adv. College Degree on top. Assoc Degree replaced HS Grads at the bottom.
    • Winner – BA/BS Degree – Pet Services Spending: $4.47B; Up $0.61B (+15.9%)                        2022: Adv. College Degree
    • Loser – Associate’s Degree – Services Spending: $0.93B; Down $0.58B (-38.3%)                     2022: HS Grads
    • Comment – Associate’s degree had the only decrease. The drop was not unexpected as they more than doubled their spending in 2022, +116%. College Grads have 47.8% of CUs but generated 107.1% of the increase.
  • CU Composition – Married, Couple Only stayed on top. Unmarried, 2+ Adults replaced Single Parents at the bottom.
    • Winner – Married, Couple Only – Services: $4.31B; Up $0.51B (+13.5%)                                  2022: Married, Couple Only
    • Loser – Unmarried, 2+ Adults – Services: $1.60B; Down $0.17B (-9.4%)                                    2022: Single Parents
    • Comment – Single Parents also spent less. All Married CUs had double digit % increases. The biggest % lift was by Married, Oldest Child <6, +29.7%. In 2022, they were the only segment that spent less on Services.
  • Occupation – Both winner and loser are new.
    • Winner–– Retired – Pet Services Spending: $2.34B; Up $0.50B (+26.9%)                                    2022: Mgrs & Profess.
    • Loser – Tech/Sales/Clerical – Pet Services Spending: $1.48B; Down $0.08B (-5.0%)                 2022: Blue Collar
    • Comment – Service Workers also spent a little less, -$0.02B. The biggest surprise was that All Other, Unemployed had the 2nd biggest $ lift and the highest % increase, +$0.26B (+45.9%).
  • # in CU – 5+ People flipped from last to first and 1 person replaced them at the bottom.
    • Winner – 5+ People – Pet Services Spending: $1.36B; Up $0.36B (+35.4%)                                 2022: 2 People
    • Loser – 1 Person – Pet Services Spending: $2.49B; Up $0.02B (+0.7%)                                          2022: 5+ People
    • Comment: All segments spent more. The biggest lifts were from CUs with 3 or more people.

We’ve seen the winners and losers in terms of change in Services Spending $ for 12 Demographic Categories. The growth slowed after 2 record lifts but was still widespread. Here’s some data which shows the evolution from 2019 to 2023. Services were hit hard by the pandemic but recovered stronger than ever with 2 record lifts. In 2023 the situation has become more “normal” but is markedly better than pre-pandemic 2019.

Total $:                   2019: $8.62B      2020: $8.69B     2021: $9.10B     2022: $12.36B      2023: $13.42B

% Segmts ↑$:        2019: 49%          2020: 21%          2021: 90%          2022: 93%             2023: 75%

Avg Big ↑$:            2019: $0.25B     2020: $0.05B     2021: $1.10B      2022: $1.43B        2023: $0.73B

Avg Big ↓$:            2019: -$0.27B    2020: -$0.89B    2021: $0.07B      2022: $0.16B        2023: -$0.16B

We found the winners in performance and $, but there were others who performed well but didn’t win. They deserve…

HONORABLE MENTION

Services is the most driven by high income. The performance of the low-income segments in this group gives evidence that Service usage is becoming more widespread. < HS Grads more than doubled their spending. The $50>69K group was up 48.9%. Blue Collar Workers and No Earner, 2+ People CUs had lifts over 25%. The other 2 segments tell a different story. Asians have the highest income but lowest % of Pet ownership. That may be changing as they doubled their Services spending. Married, with an oldest child <6 also have a higher income, but their expenditures are high, 31% above average. This increases their financial pressure. Pet Services prices are high, but they are a great benefit, so more demographics are finding the $ to spend.

Summary

For years, Services’ spending slowly but steadily increased. However, the number of outlets offering Services was radically increasing. In 2017, this competitive pressure caused Pet Parents to shop for value and spending fell 1%. In 2018, the abundance of outlets and competitive prices finally had their intended impact. Many more consumers took advantage of the convenience of Pet Services and spending literally took off with a record increase to a new all-time spending high. In 2019 Consumers held their ground at the new higher level but we saw turmoil similar to 2017. Again, value shopping likely contributed to the small decrease.

In 2020, pandemic Services outlets were often deemed nonessential, so they were subject to restrictions and closures. Services are definitely needed by some groups. However, for most demographics, Services are a convenience, and spending is very discretionary in nature. The reduced availability and the pandemic driven focus on the “needed” segments – Food and Veterinary caused a 20% drop in Services $.

In 2021 the Retail Marketplace opened up again and many Pet Parents strongly returned to their previous Services mantra, “I need help with my Pet “children” and I have the money to pay for it!”. This behavior was widespread as 90% of all demographics spent more on Services, producing a record increase. In 2022 Services showed that it was different from other segments. All had record lifts related to the Pandemic followed by drops, except for Services. 2022 spending didn’t decrease, it grew even stronger, +$3.26B and more widespread as 93% of demographics increased spending. That brings us to 2023. Growth continued, but slowed considerably, +$1.05B (+8.5%). The lift was also less widespread as 75% of CUs spent more. That’s still very good. There was 1 definite negative in 2023. Services is the segment where spending is the most driven by income, so it has always had a big disparity between segments. This improved slightly in 2022 but definitely worsened in 2023. Performance differences are a key measurement of disparity. Let’s consider the performance of the big groups. There were 7 categories with a 120+% performing big group, up 1 from 2022, and now 1 more than Supplies (6), 2 more than Veterinary (5) and 4 more than Food (3). There is an even better measure of the worsening. In 2023, the average difference between best & worst performers was 111.8%. In 2022 it was only 100.3%.

Another key trend in 2023 was that 35>64 is still the dominant group, but spending continues to skew older.

Services were hit the hardest by the pandemic, but they had a record, widespread recovery in 2021>22. They are the segment most driven by high income so the high  inflation in 2022>23 had less of an impact. It did affect the spending of some financially challenged groups, but in 2023, Services spending seems to have returned to a more normal pattern.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 4 people – a married couple with children. Their oldest child, still at home, is <18. They are 55>64 yrs-old and White, but not of Hispanic origin. They both work and at least one of them has an Advanced College Degree and is a Manager or Professional. They have an income of over $200K. They live in a small suburb in the Western U.S. and are still paying off their home mortgage.