Petflation 2023 – April Update: Prices increase to +10.4% vs 2022
Inflation continues to be big news. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are definitely slowing. April prices grew 0.5% from March and the CPI was still up +4.9% vs 2022, but down slightly from +5.0% last month. The grocery pricing surge has also slowed. After 12 straight months of double-digit YOY monthly percentage increases, grocery inflation is down to +7.1%, with 2 consecutive months below 10%. As we have seen in recent years, 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.
Total Petflation was +4.1% in December 2021 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed since July, but Petflation has generally increased. It passed the National CPI in July and is now +10.4% in April, more than double the national rate of 4.9%. We will look deeper into the numbers. This and future reports will include:
- A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
- Monthly comparisons of 23 vs 22 which will include Pet Segments and relevant Human spending categories. Plus
- CPI change from the previous month.
- Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
- Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
- Average annual Year Over Year inflation rate from 2019 to 2023
- YTD comparisons
- 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 April 2021 to April 2023. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus yearend and those from 12 and 24 months earlier are included. This will give you some key waypoints. In April prices are up from March for all segments and all but Supplies are at their cumulative inflation peak.
In March 2021, the national CPI was only +3.9% and Pet prices were +1.9%. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI while Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July 2022, when all increased. In Aug>Oct Petflation accelerated, except for a small October dip in Veterinary. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In Jan>Apr, prices in all but Supplies grew every month. Cumulative Total Petflation from Dec 2019 has been above the U.S. CPI since November.
- U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow until flattening out in Jul>Dec 2022. Prices turned up again in Jan>Apr but 38% of the overall 18.1% increase in the 40 months since December 2019 happened in the 6 months from January>June 2022.
- Pet Food – Prices stayed generally below Dec 2019 levels from Apr 2020 > Sept 2021, when they turned up. There was a sharp lift in Dec 2021, and it has continued. 93% of the 22.3% increase occurred since 2022.
- Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued from Feb> May, turned up in June, flattened in July, then turned up in Aug>Oct setting a new record. Prices stabilized in Nov>Dec but turned up in Jan>Feb, setting a new record. In March, they fell -0.3%. but are up +0.3% in April.
- Pet Services – Normally inflation is 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. Inflation was stronger in 2022 but it got on a rollercoaster in Mar>June. It turned up again July>Mar but the increase slowed to +0.1% in April. Services remains in 3rd place among Pet Industry Segments.
- Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December 2021 which put them above the overall CPI. In May 2022 prices fell and stabilized in June causing them to briefly fall below the National CPI. However, prices turned up again and despite Oct & Dec dips they have stayed above the National CPI since July and set new records in January>April.
- Total Pet – The blending of patterns made Total Pet appear calm. In December 2021 the pricing surge began. In Mar>June 2022 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December but has turned up again Jan>Apr. Except for a dip by Supplies in March, prices in all segments increased every month in 2023. It has been ahead of the cumulative U.S. CPI on our 2019>23 chart since November 2022.
Next, we’ll turn our attention to the Year over Year inflation rate change for April and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation increased to 10.4% in April and is now more than double the National rate. The chart will allow you to compare the inflation rates of 22>23 to 21>22 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. Again, we’ve included some human categories to put the pet numbers into perspective.
Overall, Prices were +0.5% vs March and were up 4.9% vs April 2022. The Grocery increase is down again, to +7.1% from +8.4%, but is still a big negative. Inflation usually continues in April so it’s not surprising that 8 of 9 categories had increased prices from last month, compared to 6 in March. 3 of the 8 increases were 1.0+%, all from the Pet Industry – Total Pet: 1.8%; Pet Food: 1.4%; Veterinary: 3.2%. The overall national YOY monthly inflation rate for April is down from March and is again much lower than the 21>22 rate. 3 categories – Pet Supplies, Medical Services and Food at home have a similar pattern. In all other categories the 22>23 inflation rate is higher than the 21>22 rate and is in fact the highest rate in any year since 2019 for all but Haircuts/Services. In our 2021>2023 measurement you also can see that over 70% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary Services, Pet Services, Medical Services and Haircuts/Personal Services. Of Note: These are all service expenditures, not products. The Pet Supplies Segment has a unique situation. The 21>23 inflation surge provided 110% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.
- U.S. CPI– Prices are +0.5% from March. The YOY increase is down to +4.9%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 2 times higher than the target. However, a 10th straight slight decline is good news. It is also good that the current inflation rate is below 21>22 but the 21>23 rate is 13.6%, 73% of total inflation since 2019. How many households “broke even” by increasing their income by 14% in 2 years?
- Pet Food– Prices are +1.4% vs March and 14.6% vs April 2022. They are also more than double the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were 6.9% above the 2019 level, but that increase is still an incredible 6.6 times the pre-pandemic 2.2% increase from 2018 to 2019. The 2021>2023 inflation surge generated 95% of the total 24.0% inflation since 2019.
- Food at Home – Prices are up +0.1% from March. The monthly YOY increase is 7.1%, down from 8.4% in March and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 25.0% Inflation for this category since 2019 is 34% more than the national CPI and remains 2nd to Veterinary. 75% of the inflation since 2019 occurred from 2021>2023. The pattern now mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>2021 then the rate accelerated. It appears that the pandemic supply chain issues in Food which contributed to higher prices started early and foreshadowed problems in other categories and the overall CPI tsunami.
- Pets & Supplies – After a dip in March, prices increased +0.3% in April. They still have the lowest increase since 2019 and remain in last place in terms of the monthly increase vs last year for Pet Segments. As we noted earlier, prices deflated in 2020>2021 so the 2021>2023 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October then prices deflated. 3 straight months of increases pushed them to a new record high in February. but prices fell in March. They bounced back in April but not quite enough for a new record.
- Veterinary Services – Prices are +3.2% from March. They are +10.2% from 2022 and are again in 2nd place behind Food in the Pet Industry. However, they are still the leader in the increase since 2019 with 30.6% compared to Food at home at 25.0%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 68% of the 4 years’ worth of inflation occurred in the 2 years from 2021>2023.
- Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. In April prices fell -0.2% from March and were only +0.4% vs 2022, the lowest rate from 2019>23. Medical Services are not a big part of the current surge as only 33% of the 2019>23 increase happened from 21>23.
- Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. April 23 prices were only up +0.1% from March and +6.4% vs 2022, which is down from +8.0% last month. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 58% of the total since 2019 occurred from 21>23.
- Haircuts/Other Personal Services – Prices are +0.3% from Mar. and +5.3% from 2022, the 2nd highest rate since 2019. Inflation had its biggest increase in 20>21 so just 50% of the inflation from 19>23 happened from 21>23.
- Total Pet– Petflation is 28% higher than the 21>22 rate, 2.1 times the National CPI and +10.4% is the highest April rate in history. Prices increased in all segments vs March so Total Pet was up 1.8%. This was expected as a Mar>Apr increase in Petflation has happened in 24 of the last 26 years. Food is the runaway leader, but the 22>23 inflation rate for all but Supplies exceeds the 21>22 rate. Pet Food has generally been immune to inflation as Pet Parents are used to paying a lot. However, inflation can cause reduced purchase frequency in the other Segments.
Now, let’s look at the YTD numbers.
The increase from 2022 to 2023 is the biggest for 5 of 9 categories. The 22>23 rate for Food at Home is essentially tied with 21>22. The Total CPI, Pet Supplies & Medical Services are significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.2%) and Pet Supplies (2.7%).
- U.S. CPI – The current increase is down 30% from 21>22 but is still 27% more than the average increase from 2019>2023, and almost 3 times the average annual increase from 2018>2021. 75% of the 18.8% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
- Pet Food – Strong inflation continues with the highest 22>23 & 21>23 rates on the chart. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022. 91.9% of the inflation since 2019 occurred from 2021>23.
- Food at Home – The 2023 YTD inflation rate has slowed slightly but still beat the U.S. CPI by 64%. You can see the impact of supply chain issues on the Grocery category as 78% of the inflation since 2019 occurred from 2021>23.
- Pets & Pet Supplies – While the inflation rate is down slightly at about 5.4%, prices are again near February’s record high. Prices deflated significantly in 2021 which helped to create a very unique situation. Prices are up 11.3% from 2019 but 113% of this increase happened from 2021>23. Prices are up 12.8% from their 2021 “bottom”.
- Veterinary Services – They held onto the top spot in inflation since 2019 but they are only the 4th highest since 2021. At +6.2%, they have the highest average annual inflation rate since 2019 but Veterinary is unique. They are the only category in which the inflation rate grew steadily every year from 2019>2023. Throughout the pandemic and recovery, no matter what, just charge more.
- Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2023 prices have deflated monthly to reach a rate actually 33.3% below the pre-pandemic 2018>19 rate.
- Pet Services – May 22 set a record for the biggest year over year monthly increase in history. Prices fell in June but began to grow again in July, reaching record highs in Sep>Apr. The January increase of 8.4% was the largest in history. YTD April has slipped a little to 7.6%. Growing demand with decreased availability is a formula for inflation.
- Haircuts & Personal Services – The services segments, essential & non-essential were hit hardest by the pandemic. After a small decrease in March 22, prices turned up again. The YTD rate is 10% below the 2020>21 peak but is 68% more than 2018>19. Consumers are paying 20% more than in 2019. This usually reduces the purchase frequency.
- Total Pet – We have seen two different inflation patterns. After 2019, Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on a different path. They deflated in 2020 and didn’t return to 2019 levels until mid-year 2021. Food prices began a slow increase, but Supplies remained stable until near yearend. In 2022, Food and Supplies prices turned sharply up. Food prices have continued to climb. Supplies prices stabilized Apr>May, grew Jun>Oct, fell in Nov, rose in Dec>Feb, fell in Mar then rose again in Apr. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.3%, 83.9% more than the National rate. In April 22 it was 20.8% less than the CPI.
Petflation is getting stronger. Let’s put the numbers into perspective. Petflation grew from 9.4% in March to 10.4% in April. This is below the record 12.0% set in November, but it is a record for the month. More bad news is that 8 of the last 9 months have been over 10%. We are back in double digits. The current rate is 6.5 times more than the 1.6% average rate from 2010>2021. There is no doubt that the current pricing tsunami is a significant event in the history of the Pet Industry, but will it affect Pet Parents’ spending. In our demographic analysis of the annual Consumer Expenditure Survey which is conducted by the US BLS with help from the Census Bureau we have seen that Pet spending continues to move to higher income groups. However, the impact of inflation varies by segment. Supplies is the most affected as since 2009 many categories have become commoditized which makes them more price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a decrease in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. This recognized spending behavior of Pet Parents suggests that we should look a little deeper. Inflation is not just a singular event. It is cumulative. Total Pet Prices are up 10.4% from 2022 but they are up 19.3% from 2021 and 23.8% from 2019. That is a huge increase in a very short period. It puts tremendous monetary pressure on Pet Parents to prioritize their expenditures. We know that the needs of their pet children are always a high priority but let’s hope for a little relief – stabilized prices and even deflation. This is not likely in the Service segments but is definitely possible in products. It’s happened before. Let’s hope for a repeat.