Information by segment as defined by USBLS

U.S. Pet Services Spending (Non-Vet) $10.87B (↑$3.43B): 2022 Mid-Year Update

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In our analysis of Pet Food & Supplies Spending, we saw strong growth in the 2nd half of 2021 which sent Supplies to a record high and returned Food to near its Pandemic binge high. Both had continued but slowed growth in early 2022. Strong inflation may have been a factor. Now we turn our attention to Pet Services. The Mid-year numbers show that spending in this segment was $10.87B, up $3.43B (+46.2%) from the previous year. Up until 2018, this segment was known for consistent, small growth. In 2018, increased outlets and competitive prices brought on a wave of new users and spending increased +$1.95B. Spending remained near this new high normal until we reached 2020. Closures due to the pandemic drove spending down $1.73B by yearend, essentially returning to the level of 2017. In 2021 things opened up and spending began to rebound. This deserves a closer look. First, we’ll look at Services spending history since 2014.

Here are the 2022 Mid-Yr Details:

Mid-Year 2022: $10.87B; ↑$3.43B (+46.2%) vs Mid-Yr 2021

Jul > Dec 2021: ↑$1.66B

Jan > Jun 2022: ↑$1.77B

Pet Services is by far the smallest industry segment. However, except for 2010 and 2011, the period immediately following the Great Recession, it had consistent annual growth from 2000 through 2016. Spending in Food and Supplies have been on a roller coaster ride during that period. Services Spending more than tripled from 2000 to 2016, with an average annual growth rate of 7.6%. Spending in the Services Segment is the most discretionary in the industry and is more strongly skewed towards higher income households. Prior to the great recession, the inflation rate averaged 3.9% with no negative impact. The recession affected every industry segment, including Services. Consumers became more value conscious, especially in terms of discretionary spending. Services saw a slight drop in spending in both 2010 and 2011, but then the inflation rate fell to the 2+% range and the segment returned to more “normal” spending behavior. In mid-2016 inflation dropped below 2% and continued down to 1.1% by the end of 2017. This was primarily due to increased competition from free-standing businesses but also an increase in the number of Pet Stores and Veterinary Clinics offering pet services. While prices still went up slightly, there were deals to be had and consumers shopped for the best price. There was no decrease in purchase frequency. Consumers just paid less so spending fell slightly. In the 2nd half of 2017 spending turned up again. More Consumers began to take advantage of the value and convenience of the increased number of outlets offering Services. This deeper market penetration caused Services Spending to take off in 2018, up $1.95B, the biggest annual increase in history. Prices turned up again in the 1st half of 2019, +2.8% from 2018. However, Services spending inched up $0.09B. In the 2nd half of 2019 consumers Value Shopped again so spending fell -$0.19B. Then came 2020 and the pandemic. Many of these nonessential businesses were forced to close and spending fell precipitously, -$1.73B to $6.89B, about the same as yearend 2017. In 2021 things opened up again and spending bounced back, +$0.55B vs the 1st 6 months of 2020. Unlike Food and Supplies the increase continued to accelerate even into 2022, despite an inflation rate of 6+%. This produced a record 12-month increase and a new record high, $10.87B.

Let’s take a closer look at some key spending demographics – Age and Income.

In the graphs that follow we compare spending for the 12 months ending 6/30/22 to the previous 12 months. The graphs also include the 2021 yearend $, so you can see spending changes in the 2nd half of 2021 and the 1st half of 2022.

The first graph is for Income, the single most important factor in increased Pet Spending, especially in Services.

Here’s how you get the change for each half using the Over $70K group as an example:

Mid-yr Total Spending Change: $8.41B – $5.04B = Up +$3.37B (Note green outline = increase; red outline = decrease)

  • 2nd half of 2021: Subtract Mid-21 ($5.04B) from Total 2021 ($6.81B) = Spending was up $1.77B in 2nd half of 2021.
  • 1st half of 2022: Subtract Total 2021 ($6.81B) from Mid-22 ($8.41B) = Spending was up +$1.60B in 1st half of 2022.

  • With the Over/Under $100K measurement, you see how Services Spending is definitely skewed towards higher incomes. The halfway spending point is about $141K so about 20% of CUs spend 50% of Services $. However, spending in both the under & over $100K groups grew in both halves.
  • All groups $70K> had steady growth. The <$70K groups had basically 2 different patterns. Surprisingly, the <$30K had growth in both halves. The $30>70K groups had decreased spending despite a 2022 lift by $30>50K.
  • The $50>70K group had the worst performance. They had the biggest decrease, -20.9% and decreases in both halves. In fact, they were the only segment with decreased spending in the 1st half of 2022.
  • The over $150K group has 16.7% of the CUs but accounts for 46.2% of Services $. This is actually a much larger share than the 37.6% that they had in pre-pandemic 2019. The pandemic has increased the importance of this group.
  • Income, especially when it is over $150K, is by far the biggest factor in the discretionary spending in the Services segment so Services spending is more unbalanced in regard to income. The highest income groups are more driven by convenience than value so high inflation rates are likely to actually increase spending because of higher prices.

Now, Services’ Spending by Age Group.

  • Basically the <25 yr-olds spent less while everyone else spent more. Their spending fell slightly in both halves.
  • The 55>64 group had the biggest increase, up +$1.17B (+85.4%) and held on to the top spot in Services spending.
  • The 35>44 yr-olds spent +$0.79B more (+50.3%) and held on to the 2nd spot in spending.
  • The 45>54 yr olds had a small increase despite a drop in the 2nd half of 2021. They are #3. In Mid-2021 they were #1.
  • Although their lift was small this year, 25>34 yr-olds are the only group with consecutive mid-year increases.
  • The 65> groups were up $1.1B (+80.3%) with lifts in both halves, including a +$0.65B increase in the 1st half of 2022. The 65>74 yr-old Baby Boomers led the way – No Surprise.
  • All groups but <25 had a spending lift in the 1st half of 2022, a big change from Food & Supplies.

Now let’s look at what is happening in Pet Services spending at the start of 2022 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 12 demographic categories. Remember, the lift in the 1st half of 2022 was +$1.77B vs 2021 and +$2.32B vs 2020.

2022 has started even better than 2021 as spending continues to grow. In 5 categories all segments spent more. Last year, only all income segments spent more. In 2020, there were 4 categories in which all segments spent less on Services. Also, the $ changes from the winners are overwhelmingly larger than the negatives of the losers. The +$1.77B increase in Pet Services came from 74 of 82 demographic segments (90%) spending more. Last year it was 78% and in 2020, 88% spent less. The strong recovery has become a growth tsunami, +58% from 2020 and even +23% from 2019.

The usual winners have overwhelmingly returned with only 2 minor surprises

  • The South
  • Tie: 55>64 & 65>74

Virtually all of the Losers were also expected. Here are the surprises:

  • Gen X
  • Northeast

The older groups, specifically Baby Boomers are driving the 1st half lift. The 55>74 yr-olds are essentially all Boomers. Most Boomer CUs are 2 people, with no kids. The younger groups had the best performance in the 1st half of 2021 and 2020. It appears that the Baby Boomers have at least briefly “taken back the torch”.

Services $ are at a record high and growing. Let’s review how we got to this point and speculate on what comes next.

Except for the trauma caused by the Great Recession which hit Services in 2010>11, from 2000 to 2016 the Services segment had slow but consistent growth. The number of outlets also was increasing. Services were gaining in popularity and many retail pet stores were looking for a competitive edge over the growing pet product sales of online retailers. Afterall, you can buy product, but you can’t get your dog groomed on the internet. By 2017 the number of outlets offering Pet Services had radically increased. This created a highly competitive market and the inflation rate dropped to near record lows. Value conscious consumers saw that deals were available, and they took advantage of the situation. However, they didn’t increase the frequency of purchase. They just paid less. This drove overall Pet Services spending down in the 1st half of 2017. The segment started to recover in the 2nd half but not enough to prevent the first annual decrease in Pet Services spending since 2011. However, it was a start. In 2018, more consumers started to recognize the convenience offered by more outlets. The latest big food upgrade was also winding down. The result was that Services started a deeper penetration into the market, especially in the younger groups. The <45 groups spent $1.47B more on Services in 2018, 74% of the total $1.95B increase in the segment. After such a big lift, a slight downturn in 2019 was not unexpected and it happened, -$0.1B. Then came 2020 and COVID. Although the consumer use of Services was becoming increasingly widespread, many Services outlets were deemed nonessential and were subject to pandemic restrictions and closures. Services Spending fell -$1.73B (-20.1%) in 2020 and nearly wiped out the big gain made in 2018.

In 2021, things opened up and Services spending began to rebound with a +$0.55B lift in the 1st half. This lift accelerated in the 2nd half and even the 1st half of 2022. Spending reached a new record high of $10.87B, with an annual growth rate of 7.3% since mid-yr 2019. That’s 43% higher than the 5.1% rate from 2009 to 2019. Pet Services have become an important option that is exercised by an increasing number of Pet Parents. However, much of the growth is increasingly being driven by higher incomes. There is some good news in this trend. Higher incomes are less negatively impacted by strong inflation. They buy the same amount, just pay more. This means that Services $ are likely to continue to grow.

U.S. PET SUPPLIES SPENDING $24.38B (↑$6.96B): MID-YR 2022 UPDATE

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In our analysis of Pet Food spending, we saw that spending had returned to strong normal growth after the up & down due to the pandemic. Supplies had a different pattern. At the beginning of 2020, Supplies Spending was down due to Tarifflation. The pandemic caused consumers to focus on needs so Supplies $ continued its steady decline from its 2018 peak reaching a low point below 2016. In 2021, that all changed. Supplies Prices had been steadily deflating and Consumers finally responded. In 2021 Pet Supplies spending took off, especially in the 2nd half. The increase slowed significantly in the 1st half of 2022. High inflation may have been a factor in the slowed increase but spending is still at a record $24.38B. The following chart should put the recent spending history of this segment into better perspective.

Here are this year’s specifics:

Mid 2022: $24.38B, ↑$6.96B (+40.0%) from Mid 2021.

The +$6.96B came from: Jul > Dec 2021: ↑$6.39B; Jan > Jun 2022↑$0.57B

The lift was huge and 92% of it came from the $6.39B increase in the 2nd half of 2021, by far the biggest YOY 6 month increase in history. Like Pet Food, Pet Supplies spending has been on a roller coaster ride, but the driving force is much different. Pet Food is “need” spending and has been powered by a succession of “must have” trends and the emotional response to the Pandemic. Supplies spending is largely discretionary, so it has been impacted by 2 primary factors. The first is spending in other major segments. When consumers ramp up their spending in Pet Food, like upgrading to Super Premium, they often cut back on Supplies. However, when they value shop for Premium Pet Food, they take some of the saved money and spend it on Supplies. The other factor is price. Before breaking the record in 2022, Pet Supplies prices reached their peak in September of 2009. Then they began deflating and in March 2018 were down -6.7% from 2009. Price inflation in this segment can retard sales, usually by reducing the frequency of purchase. While deflation generally drives Supplies spending up. A new “must have” product can “trump” both of these influencers. Unfortunately, we haven’t seen much significant innovation in the Supplies segment recently.

Recent history gives a perfect example of the Supplies roller coaster. In 2014 Supplies prices dropped sharply, while the movement to Super Premium Food was barely getting started – Supplies spending went up $2B. In 2015, consumers spent $5.4B more on Pet Food. At the same time, Pet Supplies prices went up 0.5%. This combination caused Supplies $ to fall $2.1B. In 2016 consumers value shopped for Food, saving $2.99B. Supplies spending stabilized then increased by $1B in the 2nd half when prices fell sharply. Consumers spent some of their “saved” money on Supplies. Supplies prices continued to deflate through 2017. Food spending increased $4.61B in 2017 but this generally came from older CUs, less focused on Supplies. The result was a $2.74B increase in Supplies spending.

In the 1st half of 2018 Pet Food spending slowed, +$0.25B. Supplies’ prices began inflating but were only +0.1% vs 2017. During this period Supplies Spending increased $1.23B. Inflation grew in the 2nd half of 2018 due to impending new tariffs in September. By June 2019 they were 3.4% higher than 2018. The impact of the tariffs on Supplies was very clear. Spending flattened in the 2nd half of 2018, then plummeted in the 1st half of 2019, -$2.09B. Prices stayed high for the rest of 2019 and spending fell an additional -$0.9B. In 2020 prices turned up again through March before plummeting,    -3.8% by June. However, due to the pandemic focus on “needs”, spending dropped an additional -$0.54B. The situation not only didn’t change in the 2nd half, it worsened as the $ fell an additional -$1.12B. However, 2021 brought a record resurgence as consumers “caught up” on the Supplies purchases that had been delayed due to the pandemic. Supplies spending increased +$8.65B in 2021, 20% above their 2018 peak. Sales passed $24B in  Mid-yr 2022 but the YOY 1st half increase slowed to +$0.57B. Inflation in Supplies took off at the beginning of 2022 so it may once again be a factor.

Here’s what Pet Supplies inflation looked like in Mid-2022:

  • Mid-Yr 22 vs 21: 5.6% • 2nd Half 21 vs 20: 3.9%       • 1st half 22 vs 21: 7.4%

You can see that the rate doubled in early 2022, which could have been a factor in the lower increase. However, 81% of the 40% spending increase was real. Inflation increased to 8.0% in the 2nd half of 2022 which made the 2022 annual YOY rate 7.7%. We’ll see if Pet Parents continue to spend at the same level despite record high prices.

Now, let’s take a closer look at the data, starting with two of the most popular demographic measures – age and income. The graphs that follow will show both the current and previous 12 months $ as well as 2021 yearend. This will allow you to track the spending changes between halves.

The first graph is for Income, which has been shown to be the single most important factor in increased Pet Spending, especially in Pet Supplies and both of the Service segments.

Here’s how you get the change for each half using the <$70K group as an example:

Mid-yr Total Spending Change: $7.12B – $6.90B = Up $0.22B (Note: green outline = increase; red outline = decrease)

  • 2nd half of 2020: Subtract Mid-21 ($6.90B) from Total 2021 ($7.53B) = Spending was up $0.63B in 2nd half of 2021.
  • 1st half of 2022: Subtract Total 2021 ($7.53B) from Mid-22 ($7.13) = Spending was down $0.41B in 1st half of 2022.

  • You see that there are 2 basic patterns. The groups over $100K had increases in both halves, with the largest lift coming in the 2nd half of 2021. The under $100K also had spending increases during the 2nd half of 2021 but they were small. In the 1st half of 2022, spending for all lower income groups but $30>50K fell vs 2021. The drop was large enough for $50>70K that it had the only overall mid-year decrease in spending of any group.
  • It is very obvious from the chart that Supplies spending has moved to the higher incomes, especially the $150K> group. Over $100K has 31.4% of CUs but accounts for 58.7% of Supplies $. That’s a performance level of 186.7%. However, the $150K> is even stronger with 16.7% of CUs generating 40.3% of Supplies spending – performance: 241.3%. The highest performance for any group under $100K is from $70>100K at 85.2% but the averages were: <$100K = 60.2%; <$70K = 53.7%. The halfway point in Supplies spending is an income of $124K. That’s 36% higher than the level for Food. Pet Supplies spending is very much driven by income.

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

  • There were 3 spending patterns. For 55> and 25>34 spending grew in both halves. The high-income 35>54 groups had a lift in the 2nd half of 21 then a small drop in 22. The <25 group had the only overall drop in spending.
  • The 2 biggest lifts came from 35>44, +$3.44B and 55>64, +$1.67B. Most of their increases came in the 2nd half of 21.
  • A big factor in the lower increase in 22 was that all but <25 had big spending increases in the 1st half of 21.
  • Supplies spending skews a little younger. The halfway point is 47 yrs old, a little younger than Food at 53 but in the middle of the highest income groups. Income is the biggest driver.

Now let’s look at what happened in Supplies spending at the start of 2022 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 12 demographic categories.

  • Although the overall lift was small, the biggest increases are still radically larger than the biggest decreases.
  • The increase/decrease was mixed across the marketplace but 68% of segments spent more. There was no category in which all segments spent more. Last year there were 7. In 2020 there were 5 in which all segments spent less.
  • Many of the winners are the “usual suspects”, like $150K>, Mgrs/Professionals & 2 Earners but there are a couple of surprises – Associates degree & Center City.
  • In regard to the losers, $30>49K, Asians, 1 Earner, Singles and Renters are not unexpected but Gen X, 45>54 and those with BA/BS Degree are definitely surprises.
  • Perhaps the biggest trend is that the Baby Boomers are now catching up. The younger groups “bought in” earlier on Supplies. The wins by 55>64, Homeowners w/o Mtges, Married, w/child over 18 support the Boomers’ win.
  • The importance of high income in Supplies spending is reinforced. $150K> had the biggest 2022 lift of any segment as well as a $4B lift in the 2nd half of 2021. One way to overcome strong inflation is to make more money.

Since the Great Recession the Supplies segment has become commoditized and very sensitive to inflation/deflation. Plus, since most categories are discretionary, Supplies spending can be affected by spending changes in other segments, as Pet Parents trade $. In 2018, the Pet Industry was introduced  to a new “game changer” – outside influence. The FDA warning on grain free dog food caused a big decrease in food spending but the government also radically increased tariffs which drove Supplies prices up and spending down, a record $2.98B.

However, we weren’t done yet. That brought us to 2020 and a new, totally unexpected outside influence, the COVID pandemic. This affected all facets of society, including the Pet Industry. Consumers, including Pet Parents, focused on needs rather than wants. In the Pet Industry, this meant that their attention was drawn to Food and Veterinary Services. This led to a huge lift in Pet Food $ due to binge buying but also a big increase in Veterinary spending. The more discretionary segments, Supplies and Services, suffered. Services had an extra handicap. Many outlets were not considered essential, so they were subject to restrictions and closures. Supplies were still available, but many were considered optional by consumers so spending continued to decline throughout 2020. By yearend, $ had reached the lowest level since 2015. This all happened while prices continued to deflate. That brought us to 2021. The retail economy had largely recovered and spending patterns were returning to “normal”. This was also true in Pet Supplies. Pet Parents opened their wallets and  bought the Pet Supplies that they had been holding back on for a year. The result was the biggest annual increase in history. At the end of 2021 and throughout 2022, inflation came back into the picture with the highest YOY increases in history. The ongoing lift in Supplies spending slowed in the 1st half of 2022 but that spending was going against a record increase in 2021. There was some impact on lower incomes, but the high incomes remained strong. Inflation continued to grow in the 2nd half of 2022. We’ll see if its impact on spending increases.

Petflation 2023 – June Update: Again below double digits, +9.6% vs 2022

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Inflation is no longer a “headline” but it is still news. The YOY increases in the monthly Consumer Price Index (CPI) that were larger than we have seen in decades are definitely slowing. June prices grew 0.3% from May and the CPI was still +3.0% vs 2022, but down from +4.0% 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 +4.7%, with 4 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 2022 and is now +9.6% in June, more than 3 times the national rate of 3.0%. 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
    1. CPI change from the previous month.
    2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • 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 June 2021 to June 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 June, Pet Products prices are down from May, but they increased in both Service segments.

In June 2021, the national CPI was +5.7% and Pet prices were +2.1%. 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. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In Jan>June, prices grew every month except for 2 dips by Supplies, 1 dip for the other segments and a June dip by Total Pet. Cumulative Petflation from Dec 2019 has been above the U.S. CPI since November 2022.

  • 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>Jun but 36% of the overall 18.7% increase in the 42 months since December 2019 happened in the 6 months from January>June 2022 – 14% of the time.
  • Pet Food – Prices stayed generally below Dec 2019 levels from Apr 20 > Sep 21, when they turned up. There was a sharp lift in Dec 2021, and it continued until the dip in June. 93% of the 23.1% increase has 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, another new record. They fell in March, set a record in May, then fell in June.
  • 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. Prices fell -0.3% in May then turned up slightly in June, +0.04%.
  • 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. In 2023 prices grew except for a dip in May.
  • 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, turned up Jan>May, then fell in June. Except for 5 individual monthly dips, including 2 in June, prices in all segments have increased monthly in 2023. It has been ahead of the cumulative U.S. CPI since November 2022.

Next, we’ll turn our attention to the Year over Year inflation rate change for June and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation dropped below double digits to 9.6% in June but is now over 3 times 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.

  • U.S. CPI– Prices are +0.3% from May. The YOY increase is down to +3.0%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 50% higher than the target. However, a 12th 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 still 12.3%, 64% of total inflation since 2019. How many households “broke even” by increasing their income by 12% in 2 years?
  • Pet Food– Prices are -0.2% vs May and +12.1% vs June 2022. They are also 2.5 times the Food at Home inflation rate – not good news! The YOY increase of 12.1% is being measured against a time when prices were 9.8% above the 2019 level, but that increase is still an incredible 4.3 times the pre-pandemic 2.8% increase from 2018 to 2019. The 2021>2023 inflation surge generated 99% of the total 23.9% inflation since 2019.
  • Food at Home – Prices are down -0.1% from May. The monthly YOY increase is 4.7%, down from 5.8% in May and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 25.2% Inflation for this category since 2019 is 32% more than the national CPI and remains 2nd to Veterinary. 69% of the inflation since 2019 occurred from 2021>2023. The pattern 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– Prices fell -0.5% from May, and they still have the lowest increase since 2019. They also fell again to 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. Prices fell in March, bounced back in Apr>May to a new record high then fell in June.
  • Veterinary Services – Prices are up 0.6% from They are +11.4% from 2022 and remain in 2nd place behind Food in the Pet Industry. However, they are still the leader in the increase since 2019 with 30.2% compared to Food at home at 25.2%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 64% 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 May prices fell -0.04% from May and are -0.8% vs 2022, the only 22>23 deflation in any category. Medical Services are not a big part of the current surge as only 35% of the 2019>23 increase happened from 21>23.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. June 23 prices were up +0.04% from May and +6.3% vs 2022, which is up from 5.6% last month but much lower than 8.0% in March. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 61% of the total since 2019 occurred from 21>23.
  • Haircuts/Other Personal Services – Prices are +0.4% from May and +5.0% from 2022, the 2nd highest rate since 2019. However, inflation has been rather consistent so just 54% of the inflation from 19>23 happened from 21>23.
  • Total Pet– Petflation is only 9% higher than the 21>22 rate, but 3 times the National CPI and +9.6% is the highest June rate in history. Vs May, Product Prices fell while Services increased so Total Pet fell -0.2%. Note: A May>June decrease has happened in 13 of the last 26 years so it is not that unusual. Food & Veterinary are still the Petflation leaders and have the biggest increases over 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 4 of 9 categories – All Pet. The 22>23 rate for Haircuts is slightly below 21>22. However, the Total CPI, Pet Supplies, Medical Services and Food at Home are significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.0%) and Pet Supplies (2.7%).

  • U.S. CPI – The current increase is down 41% from 21>22 but is still 11% more than the average increase from 2019>2023, and 2.3 times the average annual increase from 2018>2021. 72% of the 18.9% 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. 94.3% 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 61%. You can see the impact of supply chain issues on the Grocery category as 76% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – The inflation rate is down slightly at 5.2% as prices fell in June. Prices deflated significantly in 2021 which helped to create a very unique situation. Prices are up 11.3% from 2019 but 115% of this increase happened from 2021>23. Prices are up 13.0% from their 2021 “bottom”.
  • Veterinary Services – They held onto the top spot in inflation since 2019 but they have only the 4th highest rate since 2021. At +6.4%, 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 been deflating and are now at a rate actually 64% 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 2023 increase of 8.4% was the largest in history. YTD June again slipped a little to 7.0%. 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 6% below the peaks in 21 & 22 but is 82% more than 2018>19. Consumers are paying 21% 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 grew 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 continued to climb until June. Supplies prices stabilized Apr>May, grew Jun>Oct, fell in Nov, rose in Dec>Feb, fell in Mar, rose in Apr>May then fell in June. The Services segments have also had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.2%, double the National rate. In May 22 it was 5.8% below the CPI.

Petflation is still strong. Let’s put the numbers into perspective. Petflation slowed from 10.3% in May to 9.6% in June. This is below the record 12.0% set in November, but it is a record for the month. More bad news is that 9 of the last 11 months have been over 10% and the current rate is still 6 times more than the 1.6% average rate from 2010>2021. It’s also more than triple the national rate. 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 the most driven by higher incomes, so inflation is less impactful. This 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 9.6% from 2022 but they are up 19.2% from 2021 and 23.3% 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. We need it again.

 

U.S. PET FOOD SPENDING $36.35B (↑$4.79B): MID-YEAR 2022 UPDATE

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The pandemic had a huge impact on consumers, including spending on Pet Food. We’ll do a more detailed historical review of recent years but at Mid-year in 2022 things finally seem to be returning to a more normal situation. Pet Food Spending for the 12 months ending June 30, 2022 was up $4.79B (+15.2%) from a year ago. Let’s put that into proper perspective. In pre-pandemic, Mid-2019 Pet Food spending was $28.90B. That means that the average annual growth rate from 2019>22 is +7.9%. This is 42% better than the average growth rate of +5.6% from 1984 to 2019. This industry segment is doing well. Of course, we’re starting to face what may be a new challenge – radically high inflation in Pet Food prices. Here’s what it was in mid-year 2022:

  • Mid-yr 22 vs 21: +4.0%
  • 2nd Half 21 vs 20: +1.6%
  • 1st Half 22 vs 21: +6.5%

You can see that the inflation rate in early 2022 was over 4 times higher than the rate in late 2021. It hit 10+% in June 2022 and continued at historic high levels. Prices in the 2nd half of 2022 were 14% higher than in 2021. Traditionally, “normal” inflation increases have had little impact on Pet Food spending. However, these increases are historic. We’ll get a better indication of their current impact when the 2022 yearend Pet Food spending numbers are released  in early September. I just wanted you to be aware of the situation as we review the mid-year data.

If inflation was 4.0% for Mid-Yr 2022, then 73.7% of the increase in Pet Food spending was real. Good, but not great. We’ll see what the situation looks like at yearend. Also, 59% of the $4.79B lift occurred when inflation was lower.

Now, let’s get started with our Pet Food spending update for Mid-Year 2022. As we stated earlier, Pet Food (& Treat) Annual Spending was $36.35B, up +$4.79B (+15.2%). The following charts and observations were prepared from calculations based upon data from the current CEX report and earlier ones. The first chart will help put the current numbers into historical perspective and truly show you the roller coaster ride that continues in Pet Food Spending.

Here are the current numbers:

Mid-Yr 2022: $36.39B; ↑$4.79B (+15.2%) from Mid-Yr 2021. The net gain of $4.79B came from

◦  Jul>Dec 2021: Up $2.85B from 2020.          ◦  Jan>Jun 2022: Up $1.94B from 2021.

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

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

For over 30 years Baby Boomers were the leaders in Pet Food, both in spending and in adopting new products. Even in 2022, they still spend the most, but it turns out that the 25>34 yr-old Millennials led the movement to Super Premium in late 2014. The older groups, especially Boomers followed in 2015 and spending rose $5.4B. At the same time, the Pet Food spending of the 25>34 yr olds dropped. At first, we thought they had rolled back their upgrade. However, it turns out that they were leading the way in another element of the trend to Super Premium – value shopping. The Boomers once again followed their lead and spending fell -$2.99B in 2016. For consumers, the Super Premium upgrade movement consisted of 3 stages:

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

This brought us to 2017. Time for a new “must have” trend. That didn’t happen but the competitive pricing situation brought about another change. Recent food trends have been driven by the higher income and higher education demographics. However, the “value” of Super Premium was established and now more “available”. Blue Collar workers led a new wave of spending, +$4.6B, as Super Premium more deeply penetrated the market. After the big lift in 2017, 2018 started off slowly, +$0.25B. Then came the FDA warning on grain free dog food. Many of the recent Super Premium converts immediately rolled back their upgrade and spending fell -$2.51B. This 2018 decrease broke a 20 year spending pattern. In the 1st half of 2019, Pet Food spending remained stable at the new lower level. In the second half of 2019 we started to see a recovery from the overreaction to the FDA warning and spending increased by $2.3B. Then came 2020. The recovery was continuing but a new outside influence was added which had a massive impact on U.S. consumers – the COVID-19 pandemic. In March nonessential businesses were closed. This also produced a wave of panic buying in some truly essential product categories. In the Pet Industry there is only 1 truly essential category – Pet Food. Coupled with the FDA “recovery” and the ongoing movement to Super Premium, this produced an incredible $6.76B lift in Pet Food Spending in the 1st half of 2020. Spending fell in the 2nd half of 2020 and plummeted in the 1st half of 2021. Pet Parents didn’t binge again, and some began using up the stockpile that they panic bought in the early days of COVID. In the 2nd half of 2021, the up/down impact of COVID was essentially over. Pet Parents were still committed to their children’s health which included Super Premium Foods and Medical Supplements, often in treat form. The internet also made this quality choice accessible to more households so Pet Food spending increased both in the 2nd half of 21 and the 1st half of 22. 59% of the lift occurred in the 2nd half of 2021 when inflation was still low. Was that a factor?

Let’s look at Pet Food spending by the 2 most popular demographic measures – income & age group. They both show the current and previous 12 months $ as well as 2021 yearend. This will allow you to track the spending changes between halves. The first graph is Income, which has been shown to be the single most important factor in increased Pet Spending and its influence continues to grow.

Here’s how you get the change for each half of the 21>22 mid-yr numbers using the over $100K group as an example:

$100K> Mid-yr Total Spending Change: $16.36B – $13.77B = Up $2.59B (green outline = increase; red outline = decrease)

    • 2nd half of 2021: Subtract Mid-21 ($13.77) from Total 2021 ($15.51B) = Spending was up $1.74B in 2nd half of 2021.
    • 1st half of 2022: Subtract Total 2021 ($15.51B) from Mid-22 ($16.36B) = Spending was up $0.85B in 1st half of 2022.
  • All increased spending for the year but there were 3 different patterns in the individual groups. #1. $150K> & $50>69K spent more in both halves. #2. <$30K & $70>99K spent less in the 1st half of 2022. #3. $30>49K & $100>149K spent less in the 2nd half of 2021. All but #2 have a high/low income mix. #2 has the lowest income and the middle income groups. Both are very price sensitive. Note: Their spending dropped during the highest inflation.
  • Perhaps the most obvious fact is the continued spending disparity due to income. Back in 2014, prior to the big lift due to Super Premium, $70K was the “halfway point” in Pet Food spending. The under $70K group accounted for 66.7% of CUs and 51.1% of Pet Food spending. They lost the lead in 2015 as $70K> spent 50.8% of Pet Food $. In 2020, the binge buying of Pet Food by $100>150K pushed the $100K> group to the top at 55.1%. Then the big drop in 2021 flipped $70K> back into the lead at 60.8%. They currently have a share of 62.0%. The halfway point in Pet Food spending is below $100K but still high at $91K, the 2nd highest in history.
  • < $70K > The Pet Food spending patterns for both big groups are similar with increases in both halves. However, in a bit of a surprise, the Fall 2021 lift is larger for $70K> while the early 2022 lift is larger for <$70K. Higher Inflation appears to not have grossly affected these big groups.
  • < $100K > The spending patterns of these 2 groups closely mirrors the Under/Over $70K pattern. The Fall 2021 spending lift for the $100K> group was 100% driven by $150> CUs. The Spring 2022 lift for <$100K was totally driven by CUs with an income of $30>69K. Again, not the result that you would expect based upon higher inflation.
  • <$30K – With a lift in the Fall and a drop in the Spring, spending for this lowest income group essentially remained stable vs last year. They may have been impacted by rising prices in 2022.
  • $30>49K – This low-income group also includes many Retirees. They are growing in number and are committed to their pets. However, their spending behavior timing often lags behind other groups which may explain the Spring lift.
  • $50>69K – This low income group was hit hard by the pandemic. With steady growth in both halves, they have finally surpassed their Pet Food spending in pre-pandemic 2019.
  • $70>99K –This middle-income group was the most negatively affected by the pandemic. However, they fully recovered in 2021. Then spending flattened in early 2022. They are very value conscious. We’ll see if the skyrocketing inflation in the 2nd half of 2022 affects their Pet Food spending.
  • $100K>149K – High income is increasingly becoming “where it’s at” in Pet Spending. This group led the way in Pet Food binge buying and the subsequent drop. Sales grew slightly in early 2022 so they remain above 2019 $.
  • $150K > Their Pet Food spending also fell in 2020, likely due to value shopping on the internet. They came back strong in 2021, 10% above 2019. $ are up slightly in 2022. Strong inflation and the resulting higher prices will likely cause them to spend more.

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

  • 25>34 yr olds had a steady decline. All other groups spent more but 75> had a spending dip in early 2022.
  • <25 – Their spending had a huge increase and they are back above $1B. It’s likely that more moved out of their parents’ home and many added pets to their household.
  • 25>34 – A -$1.35B drop after last year’s $1.77B increase. This group, especially those with families, are under a lot of financial pressure. Overall inflation likely caused many CUs to cut back on spending and even rescind Food upgrades.
  • 35 > 44 – Spending fell in 2020 likely because they turned to the internet. They are 2nd in income and their spending has smaller fluctuations. Their biggest lift occurred in the 1st half of 2022 and they exceeded $6B for the 1st time.
  • 45 > 54 and – They have the highest income, so their annual up/down spending pattern is not expected. Their Pet Food $ dropped throughout 2020 but it has increased in every half since then. However, it is still below the $7.09B peak in 2019. Value Shopping & downgrades/upgrades are all likely to be factors in a complicated pattern.
  • 55>64 – This group is still mostly Boomers, the most emotional Pet Parents. In 2020 they led the way in Pet Food binge buying. They also had the biggest 2021 drop. With growth in both halves, including a $0.77B lift in 2022 they have now returned to their pre-pandemic 2019 spending level.
  • 65 > 74 – This group is all Boomers but with lower income. Spending grew in both halves. They are committed to their pets. Even though the members change, they are the only age group with steady annual growth since 2016.
  • 75> – COVID had little impact on spending. In 2021 they upgraded, +$1.76B. Spending fell slightly in the 1st half of 22.

That gives us the “big picture” for our 2022 Mid-year update of Pet Food spending. Now we’ll take a closer look at the start of 2022. We’ll compare it to the 1st half of 2021 and document the biggest changes since then.

  • The biggest increases are much larger than the biggest decreases in 10 categories. They are almost equal in Age, but the drop is larger in CU Composition. In Housing and CU Size, all segments spent more in 2022 than in 2021.
  • There are a number of usual winners, Managers, White, Not Hisp., Boomers, 55>64, Big Suburbs, Homeowners w/Mtges and 3+ Earners. There are also some surprises like $30>49K, 2+ Unmarried Adults and HS Grads.
  • When we look at the losers, we also see some familiar names, <$30K, Born <1946, 1 Earner Single and Center City. However, there are 2 big surprises – Adv. College Deg. and 25>34 yr olds.
  • Pet Food spending in the 1st half of 2022 was $1.94B ahead of the 1st half of 2021 but $3.44B ahead of 2019. In fact, 68 of 82 demographic segments (83%) spent more in 2022 than in 2021. The pandemic turmoil appears to be over.

The spending lift was relatively large in the 1st half, but not unexpected, after the huge drop in Pet Food $ in the 1st half of 2021 following the buying binge in 2020. It appears that the steep pandemic roller coaster may have ended in 2021 and we might be back on a more normal path of consistent growth. Pet Food spending in mid-yr 2022 was $36.35B. This is $1.57B below the binge peak of $37.96B in mid-2020 but $7.49B more than the $28.90 in pre-pandemic mid-yr 2019. If we ignore the pandemic turmoil, then Pet Food spending has grown 25.9% in 3 years. That’s an annual growth rate of +7.9%, which is 41% higher than the +5.6% rate from 1984 to 2019. That’s real proof that the Pet Food segment is back and doing even better than usual. Unfortunately, we may be facing a new challenge – runaway inflation. It started slowly at the end of 2021, then continued to grow in 2022, hitting 10+% in June and has stayed in double digits. Past periods of Pet Food inflation just caused Pet Parents to spend more. Pets must have food. However, this price increase is at record levels. We should note that the pandemic is also a factor in inflation because supply chain issues related to COVID had a big impact on prices. Overall inflation has lessened but there has been little improvement in Pet Food. All pet spending has been moving towards higher incomes. Households with a lot of financial pressure could cut back on more discretionary pet spending, reduce purchase frequency, and even downgrade their pet food. We have seen little evidence of a negative impact on Pet Food in early 2022. We’ll see what happens in the 2nd half of 2022 when inflation took off. We’ll get that data in September.

Petflation 2023 – May Update: Prices are still high, +10.3% vs 2022

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Inflation is no longer a “headline” but it is still news. The YOY increases in the monthly Consumer Price Index (CPI) that were larger than we have seen in decades are definitely slowing. May prices grew 0.3% from April and the CPI was still up +4.0% vs 2022, but down from +4.9% 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 +5.8%, with 3 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 2022 and is now +10.3% in May, more than 2½ times the national rate of 4.0%. 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
    1. CPI change from the previous month.
    2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from May 2021 to May 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 May, Pet Products prices are up from April, but they fell in both Service segments.

In May 2021, the national CPI was +4.8% and Pet prices were +2.2%. 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. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In Jan>May, Food prices grew every month. Prices in the other segments also grew except for 1 monthly dip for each. Cumulative Petflation from Dec 2019 has been above the U.S. CPI since Nov.

  • 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>May but 38% of the overall 18.3% increase in the 41 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 23.3% increase has 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 but they set a new record in May.
  • 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 and prices fell -0.3% in May. Services still have the 3rd highest Petflation rate.
  • 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. In 2023 prices grew except for a dip in May.
  • 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>May. Except for 3 individual monthly dips, prices in all segments have consistently increased 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 May and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation slowed slightly to 10.3% in May but is now 2½  times 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 +0.3% vs April and were up 4.0% vs May 2022. The Grocery increase is down again, to +5.8% from +7.1%, but is still a big negative. Inflation often slows in May so it’s not surprising that 3 of 9 categories had decreased prices from last month, compared to 1 in April. Of the 6 categories with increases, only 2 were over 0.3%, both from the Pet Industry – Supplies: 0.9%; Pet Food: 0.8%. The overall national YOY monthly inflation rate for May is down from April and is again much lower than the 21>22 rate. All but 3 categories – Pet Food, Veterinary and Total Pet have a similar pattern. In these 3 the 22>23 inflation rate is higher than the 21>22 rate and is in fact the highest rate in any year since 2019. 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 116% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

  • U.S. CPI– Prices are +0.3% from April. The YOY increase is down to +4.0%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 2 times higher than the target. However, a 11th 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 still 13.0%, 69% of total inflation since 2019. How many households “broke even” by increasing their income by 13% in 2 years?
  • Pet Food– Prices are +0.8% vs April and 13.8% vs May 2022. They are also more than double the Food at Home inflation rate – not good news! The YOY increase of 13.8% is being measured against a time when prices were 8.4% above the 2019 level, but that increase is still an incredible 4.9 times the pre-pandemic 2.8% increase from 2018 to 2019. The 2021>2023 inflation surge generated 99% of the total 24.3% inflation since 2019.
  • Food at Home – Prices are up +0.1% from April. The monthly YOY increase is 5.8%, down from 7.1% in April and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 24.9% Inflation for this category since 2019 is 32% more than the national CPI and remains 2nd to Veterinary. 74% of the inflation since 2019 occurred from 2021>2023. The pattern 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– Prices increased +0.9% from April, but they still have the lowest increase since 2019. However, they did move up to 3rd 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 Apr>May and set a new record.
  • Veterinary Services – Prices are -0.2% from April. They are +11.0% from 2022 and remain in 2nd place behind Food in the Pet Industry. However, they are still the leader in the increase since 2019 with 29.8% compared to Food at home at 24.9%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 64% 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 May prices fell -0.1% from April and are -0.1% vs 2022, the only 22>23 deflation in any category. 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. May 23 prices were down -0.3% from April and +5.6% vs 2022, which is down from 6.4% last month and 8.0% in March. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 62% of the total since 2019 occurred from 21>23.
  • Haircuts/Other Personal Services – Prices are +0.2% from Apr. and +4.9% from 2022, only the 3rd highest rate since 2019. Inflation had a significant surge in 20>21 so just 54% of the inflation from 19>23 happened from 21>23.
  • Total Pet– Petflation is 27% higher than the 21>22 rate, 2.5 times the National CPI and +10.3% is the highest May rate in history. Vs April, Product Prices increased while Services fell so Total Pet was only up 0.3%. Note: An Apr>May increase has happened in 21 of the last 26 years. Food & Veterinary are the leaders and are the only segments in which the 22>23 inflation rate 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 4 of 9 categories – All Pet. The 22>23 rate for Haircuts is essentially tied with 21>22. The Total CPI, Pet Supplies, Medical Services and Food at Home are significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.1%) and Pet Supplies (2.7%).

  • U.S. CPI – The current increase is down 35% from 21>22 but is still 20% more than the average increase from 2019>2023, and over 2½ times the average annual increase from 2018>2021. 74% 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. 93.3% 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 60%. You can see the impact of supply chain issues on the Grocery category as 77% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – The inflation rate is up slightly at 5.5% and prices hit a new record high in May. 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 +6.3%, 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 48% 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 May has slipped a little to 7.2%. 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 9% below the 2020>21 peak but is 76% 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>May. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.3%, 94.3% more than the National rate. In May 22 it was 5.8% less than the CPI.

Petflation is still strong. Let’s put the numbers into perspective. Petflation slowed from 10.4% in April to 10.3% in May. This is below the record 12.0% set in November, but it is a record for the month. More bad news is that 9 of the last 10 months have been over 10%. We are back in double digits. The current rate is 6.4 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 10.3% from 2022 but they are up 19.3% from 2021 and 23.6% 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. We need a repeat.

Petflation 2023 – April Update: Prices increase to +10.4% vs 2022

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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
    1. CPI change from the previous month.
    2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • 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 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.

Inflation: A Historic Look – 1992 > 2022

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There is no doubt that the current inflation wave is big news with rates higher than we have seen in decades. Through a series of graphs, we hope to put the current situation into a better perspective. We will track the change in CPI of a few key, major expenditure groups over the last 30 years – from 1992 to 2022, then show the evolving impact on Total Retail and a major Pet Relevant channel. In our 1st chart we will compare the CPI change of the 2 biggest groups – Commodities and Services so that we can better appreciate their influence on the National CPI.

We will show the specifics for certain years including: every 10 years, the great recession, and the pandemic. There are also some data highlights: light blue = deflation, red = the highest annual inflation rate; pink = 2nd highest rate; yellow = 3rd highest rate.

In what may be a surprise to many of you, the Services segment leads the way in Inflation. They also have the biggest share of the CPI index, 60%, + or minus 4%, every year from 1992 to 2022. We should note that mortgage payments/rent (a service expenditure) accounts for 1/3 of the total CPI number. This is major part of the budget for most households, but changes occur less frequently since the price is generally determined by mortgages or leases.

  • Services – There were no deflationary years for Services. Prices just kept increasing. They had doubled by 2017 (25 yrs) and had increased by 139% in 2022, which produced an annual average inflation rate of +2.9%. The 3 biggest increases occurred in: 2022 = +6.2% (No surprise); 2001 = +4.1%; 2006 = 3.8%. Inflation did slow a little during the great recession 2009>11 and actually fell below 1% to +0.8% in 2010. We have a similar pattern for Services in the Pet Industry. The CPI for Veterinary and Non-Vet Services has been tracked since 1997. Prices for both segments have increased every year but at a higher rate than for National Services. Non-Vet Services = +3.3%; Veterinary = +4.7%.
  • Commodities – These are products. They have a wide range – from Food at Restaurants to gasoline to groceries. You can see that the pricing is much more volatile for this group. They have increased by 71% since 1992 for an annual average increase of +1.8%, 38% below Services. Prices have also deflated in 5 years, with the biggest drop -3.3% in 2015. The second biggest drop, -2.9% occurred in 2009 in the heart of the Great Recession, but they quickly recovered. A very significant trend started in 2013 as prices stabilized then fell in 2015. They essentially remained at this lower level until the beginning of the Pandemic Pricing surge in 2021. This surge produced the 2 highest annual inflation rates for this group: 2022 = +10.9%; 2021 = +7.8%.
  • National CPI – In 2022, prices reached double the level of 1992, with an average annual inflation rate of +2.5%. While inflation in Commodities segments, like Groceries and Gasoline get far more publicity, the Services group has slightly more influence over the National numbers. However, big changes in any large segment, like Gasoline or Groceries can definitely have an impact. The size and consistent inflation of Services has driven the National CPI up every year but 2009, -0.4%. The 2 biggest increases occurred in 2022 = +8.0%; 2021 = +4.7%. However, because of the frequency of purchases, inflation in Commodities is more noticeable. Let’s take a closer look.

The next graph compares 30 years of Commodity inflation to one of its subcategories – Pet Products. While the CPIs for individual Pet Industry Segments have only been tracked since 1997, the pricing of Pet Products (Pets, Food & Supplies) has been recorded since 1977. The US BLS recognized that Pets were an important part of U.S. Households long before there were any major Pet chains, SuperStores or even “Pet Parents”. Remember, in 1992 and earlier most pet products were purchased in Grocery stores. According to the Economic Census, this didn’t change until 1997.

As you can see the inflation patterns for Commodities and Pet Products were basically the same until 2008. Both turned up in 2008, but the Pet Products lift was the biggest single year increase from 1992>22 for Pet Products, +9.19%. This was followed by a +7.2% increase in 2009. Prices rose 17% in 2 years. In reaction to the Recession, Commodities prices fell -2.9% in 2009 and Pet Products fell -1.0% in 2010. Both recovered quickly and prices essentially flattened out for Commodities until 2021 and Pet Products until 2022. There was some minor turmoil as most of the deflationary years for both occurred during this “flat” period – Pet Products (4 of 6) and Commodities (3 of 5). For both the highest inflation occurred in 2022 – Pet Products (+9.18%) and Commodities (+10.9%). Commodities prices increased +19.6% from 2020 to 2022. While Pet Products still has the bigger cumulative increase at +74%, Commodities, at 71%, significantly narrowed the gap. Except for the timing of their big 2 year “lift” these 2 groups have a very similar pricing pattern.

Now let’s look at the impact of inflation on sales. Price Inflation can reduce the amount of product sold. At the very least it reduces the “real” amount of a sales increase. Consumers get less for their money. In our next graph we will track the sales for Total Retail from 1992 to 2022. We will factor inflation into the numbers to show the “real” increase in product sold over the years. We are using the All Commodities CPI in our calculations. It’s an accurate representation. The Census Bureau defines a retail outlet as one whose primary business is the sale of products to consumers. This ranges from restaurants to gas stations to department stores. Note: The outlet may also sell services but not a significant amount.

Actual Total Retail Sales quadrupled in 30 years from $2T to 8T. There were only 2 years when they declined 2008 & 2009, which was due to the onset of the Great Recession (Pink highlights). The market recovered in 2011. It took a total of 4 years to get back to 2007 Sales numbers. (Black Outline). It took 13 years for sales to double from $2T to $4T and another 13 to reach $6T. However, the Pandemic Recovery in 2021 & 2022 pushed the market from $6T to $8T in just 4 years. $1.9T of the lift occurred from 2020>2022 with $1.2T occurring in 2021 and $0.7T in 2022. These are the 2 largest annual increases from 1992>22. The average annual increase for Total Retail $ over 30 years was +4.8%.

The Commodities CPI increased by 71% in 30 years, an average annual inflation rate of +1.8%. Prices deflated in 5 years with the biggest drop, -3.3% occurring in 2015. The biggest lifts prior to the Pandemic period occurred in 2008, +4.3% and 2011, +5.3%. After the 2011 increase prices remained close to the +45% cumulative level until the big lifts in 2021 (+7.8%) and 2022 (+10.9%). Commodity Prices rose 19.6% in just 2 years. The biggest prior 2 year increase was +8.3% in 2010>11. The current lift is more than twice as large and must impact retail sales.

“Real” Total Retail Sales increased 136% from 1992 to 2022, an average annual increase of 2.9%. They declined in 3 years. The 2008 & 2009 declines mirrored the drops in Actual Sales but 2022 was different. Due to +10.9% inflation, Cumulative real sales declined despite a +9.1% increase in actual sales. There are other examples of the impact of inflation. Actual Sales recovered from the 2008>09 drops in 4 years. For real sales it took 2 years longer. Also, Actual Sales doubled in 13 years. It took 25 years for Real Sales. Finally, the goal is to always have over 50% of the cumulative actual sales increase to be real. This was true in Total Retail for 25 of 30 years. The percentage was below 50% from 2011>14 but hit bottom at 45% in 2022. Real sales is a measure of the amount of product sold. High inflation can negatively affect consumer spending. At first, they spend more but get less. If it continues, it can lead to a drop in spending.

Now, we’ll turn to the data that you’ve all been waiting for – the impact of Pet Products inflation on Pet Store Sales.

As you can see, this graph is different from the others. The primary reason is that monthly and annual sales data for Pet Store $ales is still not reported by the Census Bureau even though their own numbers from the Economic Census show that Pet Store sales exceed the amount sold by at least 6 other channels that are reported monthly. The data reported is from the Economic Census which occurs every 5 years. We will have the 2022 numbers in the Fall of 2024. To give you a 30 year look I gathered data going back to 1987. The data is plotted by Total Sales $ for the reporting years rather than by % of increase from 1987. The Real Sales $ were computed by factoring in cumulative Pet Products inflation from 1987. The US BLS has been gathering this CPI data monthly since 1977. This is a good CPI match as even with the growth of Services, Pets & Pet Products accounted for 93+% of Pet Store Sales in 2017, according to the Economic Census. The % shown next to the “real” $ reflects the amount of the Actual cumulative $ increase that is real.

The growth is beyond spectacular. From 1987 to 2017, Actual $ales increased by $17B, (1250%) with an average annual increase of +9.1%. This spectacular growth was due to a number of factors – the creation and growth of Pet Chains and SuperStores, the transition from Pet Owners to Pet Parents, Baby Boomers moving into their higher income years and the increasing personalization of our Pet Children. Real Sales growth was +9B, (660%) with an annual growth rate of +7.0% – still amazing! About the only negative to be found is in the definite drop in the percentage of actual growth that is real. In the 90s it was above 70%. It fell into the 60+% range at the start of the Millennium but since 2012 it has dropped into the low 50s. This was primarily driven by extreme inflation from 2006>09, +21%. Prices deflated -1.2% from 2012>17 which caused the slight increase in % so there is no doubt that inflation has a real retail impact. That leaves us to  wonder what will happen in 2022. We already know the CPI facts. Pet Product Prices only increased +3.8% from 2017>21 but then jumped +9.2% in 2022 and are now double what they were in 1987. We look forward to getting the Sales data. A first “peak” will come from the mid-year 2022 Consumer Expenditure Survey which will be released shortly.

Petflation 2023 – March Update: Price increase slows to +9.4% vs 2022

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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. March prices grew 0.3% from February and the CPI was still up +5.0% vs 2022, but down from +6.0% 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 +8.4%.  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 still +9.4% in March, 88% higher than the national rate of 5.0%. 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
    1. CPI change from the previous month.
    2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from March 2021 to March 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 March Supplies prices fell slightly but all other segments are at their cumulative inflation peak.

In March 2021, the national CPI was only +3.1% and Pet prices were +1.5%. 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>Mar, prices in all but Supplies grew every month. Total Petflation since 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>Mar but 39% of the overall 17.5% increase since 2019 happened 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. 92% of the 20.6% 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 to a new record high. Prices stabilized in Nov>Dec but turned up again in Jan>Feb, reaching a new record high. In March, they fell -0.3%.
  • 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 has turned up again July>Mar but 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>March.
  • 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 then turned up again in January and February as all segments increased prices. Prices grew again in March as all, but Supplies had increases. It has been ahead of the cumulative U.S. CPI on our 2019>23 chart since November.

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>23 & 19>23. Although Petflation slowed in March, it is now 88% higher than 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 +0.3% vs February and were up 5.0% vs March 2022. The Grocery increase is below double digits at 8.4% but is still a big negative. Inflation usually continues in March so it’s not surprising that 6 of 9 categories had increased prices from last month, compared to 8 in February. 4 of the 6 increases were 0.7+%, all from the Pet Industry – Total Pet: 0.7%; Pet Food: 1.6%; Veterinary: 0.9%; Pet Services: 0.8%. The overall national YOY monthly inflation rate for March is down from February, but it is also much lower than the 21>22 rate. 4 categories – Pet Supplies, Veterinary, 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: They are all service expenditures, not products. The Pet Supplies Segment has a unique situation. The 21>23 inflation surge provided 114% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

  • U.S. CPI– Prices are +0.3% from February. The YOY increase is down to +5.0%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 2.5 times higher than the target. However, a 9th 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 14.0%, 75% of total inflation since 2019. How many households “broke even” by increasing their income by over 14% in 2 years?
  • Pet Food– Prices are +1.6% vs February and 14.4% vs March 2022. They are also 71% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 5.4% above the 2019 level, but that increase is still an incredible 6.9 times the pre-pandemic 2.1% increase from 2018 to 2019. The 2021>2023 inflation surge generated 93% of the total 21.3% inflation since 2019.
  • Food at Home – Prices are down -0.2% from February. The monthly YOY increase is 8.4%, down from 10.2% in February and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 24.5% Inflation for this category since 2019 is 31% more than the national CPI and remains 2nd to Veterinary. 78% 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 – Prices are down -0.3% from February. That’s the 1st decrease since November. 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 slightly in March.
  • Veterinary Services – Prices are +0.9% from February. They are +7.7% from 2022 and are now in 3rd place behind Food & Services in the Pet Industry. However, they are the leader in the increase since 2019 with 26.9% compared to Food at home at 24.5%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 65% 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 March prices fell -0.5% from February and were +1.0% vs 2022, the lowest rate from 2019>23. Medical Services are not a big part of the current surge as only 34% of the 2019>23 increase happened from 21>23.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. March 23 prices were up +0.8% from last month and +8.0% vs 2022, the 2nd highest rate next to January’s +8.4%. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 61% of the total since 2019 occurred from 21>23, down from 73%.
  • Haircuts/Other Personal Services – Prices are +0.2% from Feb. and +5.4% 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 25% higher than the 21>22 rate, 88% ahead of the National CPI and the +9.4% is the highest March rate in history. Prices increased in all segments but Supplies vs February so Total Pet was up 0.7%. This was expected as a Feb>Mar increase in Petflation has happened in 23 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 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 Haircuts/Services 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 27.5% from 21>22 but is still 32% more than the average increase from 2019>2023, and more than 3 times the average annual increase from 2018>2021. 75% of the 18.9% 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. 90.7% 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 71%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – While the inflation rate is down slightly at about 5.6%, prices remain 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 114% of this increase happened from 2021>23. Prices are up 12.9% 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 +5.9%, 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 12.5% 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>Mar. The January increase of 8.4% was the largest in history. YTD March remained stable at 8.0%. 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 11% below the 2020>21 peak but is 59% more than 2018>19. Consumers are paying 20% more than in 2019. This usually reduces the purchase frequency.
  • Total Pet – We have seen basically 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, then fell in Mar. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.3%, 77.6% more than the National rate. In March 22 it was 27.5% less than the CPI.

Petflation is still very strong. Let’s put the numbers into perspective. Petflation fell from 10.9% in February to 9.4% in March. This is below the record 12.0% set in November, but it is a record for the month. Some good news is that after 7 straight months over 10%, we are finally out of the double digits. However, the current rate is 6 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 9.4% from 2022 but they are up 17.6% from 2021 and 22.0% 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.

Petflation 2023 – February Update: Price increase grows to +10.9% vs 2022

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Inflation continues to make headlines. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are slowing a little. February prices grew 0.6% from January and the CPI was still up +6.0% vs 2022, but down from +6.4% last month. The grocery price surge also slowed but they’re still up 10.2% over 2022. That’s 12 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. 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 Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 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 +10.9% in February, 81.7% higher than the national rate of 6.0%. 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
    1. CPI change from the previous month.
    2. Inflation changes for recent years (22>21, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from February 2021 to February 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 February Supplies passed their old November pricing high so all segments are now at their cumulative inflation peak.

The pandemic hit home in 2020. In February 21, the national CPI was only +2.4% and Pet prices were +1.4%. 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>Feb, all inflated and Total Petflation since 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>Feb but 40% of the overall 18.6% increase since 2019 happened 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. 91% of the 18.6% 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 to a new record high. Prices stabilized in Nov>Dec but turned up again in January and reached a new record high in February.
  • 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 has turned up again July>Feb but again fell behind Food so it is 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 & February.
  • 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 then turned up again in January and February as all segments increased prices. It has been ahead of the cumulative U.S. CPI on our 2019>2023 chart since November.

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 also added a new measurement, showing the total inflation from 2021 to 2023. Although national inflation is slowing, it’s not for Pet. This will allow you to see the cumulative amount of the current pricing surge. You can compare the inflation rates of 22>23 to 21>22 but also see how much of the total inflation since 2019 came from the ongoing trauma. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.6% vs January and were up 6.0% vs February 2022. The Grocery increase is down to 10.2% but is still a big negative. Prices often rise early in the year so it’s not surprising that 8 of 9 categories had increased prices from last month. 7 of the increases were 0.5+%. Last month there were 5 but only 1 in December. 3 of the increases were over 1.0%, all from the Pet Industry – Total Pet: 1.5%; Pet Food: 1.2%; Veterinary: an incredible 2.5%. The overall national YOY monthly inflation rate is slightly down from January, but it is significantly down vs the 21>22 rate. 3 categories – Pet Supplies, Medical Services & Haircuts 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. In our new 21>23 measurement you also can see that over 70% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary, Medical Services and Haircuts & Personal Services. The Pet Supplies Segment has a unique situation. The 21>23 inflation surge provided 116% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

  • U.S. CPI– Prices are +0.6% from January. The YOY increase is down to +6.0%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 3 times higher than the target. However, an 8th 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 14.4%, 76% of total inflation since 2019. How many households “broke even” by increasing their income by over 14% in 2 years?
  • Pet Food– Prices are +1.2% vs January and 15.2% vs February 2022. They are also 49% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 3.0% above the 2019 level, but that increase is still an incredible 8.9 times the pre-pandemic 1.7% increase from 2018 to 2019. The 2021>2023 inflation surge generated 91% of the total 21.3% inflation since 2019.
  • Food at Home – Prices are up 0.3% from January. The monthly YOY increase is 10.2%, down slightly from 11.3% in January but considerably lower than Jul>Sep 2022 when it exceeded 13%. The 25.0% Inflation for this category since 2019 is 32% more than the national CPI but now 2nd to Veterinary. 79% of the inflation since 2019 occurred from 2021>2023 but the pattern is different from the national CPI. 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 – Prices are up +0.5% from January. That’s 3 straight monthly increases after a dip in November. They still have the lowest increase since 2019 and now have fallen to 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. However, 3 straight months of increases has pushed them to a new record high in February.
  • Veterinary Services – Prices are +2.5% from January. They are +10.3% from 2022 and are in 2nd place behind Food in the Pet Industry. However, they are now the leader in the increase since 2019 with 26.4% 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 but only 61% 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 February prices fell -0.5% from January and were +2.1% vs 2022, the lowest rate since 2019. Medical Services are not a big part of the current surge as only 34% of the 2019>23 increase happened from 21>23.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. February 23 prices were up +0.5% from January and +7.5% vs 2022. The rate has slowed but prices still reached a new all-time high. Their inflation is tied to the current surge as 73% of total since 2019 occurred from 2021>2023.
  • Haircuts & Other Personal Services – Prices are +0.6% from January and +4.8% from 2022, but this is only the 3rd highest rate since 2019. Inflation began to grow in 20>21 and just 51% of the inflation from 19>23 happened from 21>23.
  • Total Pet– Petflation is double the rate of last year, 81.7% ahead of the National CPI and the +10.9% is also the highest February rate in history. Prices increased in all segments vs January so Total Pet was up 0.5%, which was expected. A Jan>Feb increase in Petflation has happened in 25 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 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 3 categories is essentially tied with 21>22. Only the Total CPI is significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.3%) and Pet Supplies (2.7%).

  • U.S. CPI – The current increase is down 19.5% from 21>22 but is still 41% more than the average increase from 2019>2023, and more than 3 times the average annual increase from 2018>2021. 76% of the 18.9% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
  • Pet Food – Inflation continues to grow stronger. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022. 89.5% 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 74%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – While the inflation rate has stabilized at about 6.2%, prices reached a record high in February. Prices deflated significantly in 2021 which helped to create a very unique situation. Prices are up 11.3% from 2019 but 114% of this increase happened from 2021>23. Prices are up 12.9% from their 2021 “bottom”.
  • Veterinary Services – Passed Food at Home for the top spot in inflation since 2019. They are the only segments on the chart with a 5+% average annual inflation rate since 2019. However, Veterinary is unique. They are the only category in which the inflation rate grew steadily every year until 2023 when it has almost doubled. 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 2022>23 inflation has stabilized at a rate only 8% higher than 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>Feb. The January increase of 8.4% was the largest in history. YTD February is down slightly to 8.0%. 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 11% below the 2020>21 peak but is 51% more than 2018>19. Consumers are paying 20% more than in 2019. This usually reduces the purchase frequency.
  • Total Pet – We have seen basically 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 generally 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, then rose again Dec>Feb. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.8%, 74.2% more than the National rate. In March 22 it was only 72.5% of the CPI.

Petflation is growing stronger. Let’s put the numbers into perspective. The 10.9% February 2023 increase in Total Petflation is below the record 12.0% set in November, but it is still a record for the month. We’ve also now had 7 consecutive months over 10%. The last time that petflation exceeded 10% was 10.3% in 2009. The current rate is more than 7 times the 1.5% 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 personnel 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. There is another fact that just came out that is relevant to our spending question. The US BLS recently decided to update the CPI annually rather than every 2 years based upon each expenditure’s share of total expenditures. I worked with them to update the CPI of my specially created retail aggregates. During our conversations, they noted that Pet expenditures in 2021 had one of the biggest share gains of any group. Apparently, Pet Parents are reallocating their $ to prioritize their “children’s” needs. This is not unexpected. We’ll see if this behavior is impacted by continued high inflation.

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

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The first 5 reports of our Pet Spending Demographics analysis have been very detailed and intense. We looked at the industry as a whole and each of the individual segments. Recent years have seen some turmoil. We have seen the very real impact of outside influences on the industry. In the 2nd half of 2018, the FDA warning on grain free dog food caused a $2.3B drop in Food $ and new Tariffs flattened Supplies $, but Services had a record lift. In 2019, Food rebounded but the tariffs really hit the Supplies segment with a $3B drop. Veterinary $ grew slightly while Services $ fell a bit. The net was -0.2% drop in Total Pet. The 2020 pandemic had varied impacts as Pet Parents focused on needs. This caused a lift in Veterinary and a huge increase in Food because some demographics binge bought out of fear of shortages. Services spending plummeted due to outlet closures and restrictions while Supplies $ continued to fall because consumers saw them as more discretionary. 2021 brought a big change, Food $ fell because there was no “binge” repeat. However, Pet Parents focused on their “children” producing a widespread record lift in all other segments and a record $16B increase.

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 2020 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 2021 share of spending for each segment and the evolution over the past 29 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 – +517%; annual growth rate of 6.48%. This will help put our comparisons into better perspective.

                                                                  Food: 34.4%; Down from 44.0%                Veterinary: 32.7%; Up from 29.7%

                                                               Supplies: 23.8%; Up from 18.1%                Services: 9.1%; Up from 8.2%

In 2021, Food lost almost 10% of share in Total Pet $ which was gained by all other segments. The most notable trend from 1992 to 2012 was the decline in Food share while Supplies gained in importance. In the 90’s Pet Owners became Pet Parents. At the same time, Pet Chains and Super Stores came to the forefront and there was a big Pet Product expansion into the Mass Market. In recent years, the Product Segments have been on a rollercoaster. Food reached 44% in 2020, the highest level since 44.8% in 1998. Supplies have been trending down since 2012, hitting bottom at 18.1% in 2020. The Services segments have been more stable. They have generally trended up since 2012. Non-Vet Services peaked at 11+% in 2018>19 then fell to 8.2% in 2020. They turned sharply up in 2021. Veterinary has been in the 25>27% range since 2012 but with a big lift in 2021, they broke the 30% mark and now trail Food by only 1.7%. Big Trends in Food and Petflation in Supplies tend to make the Product Segments more volatile than the Services Segments.

Now let’s get started with a look at the “Big Spenders”. The following 2 charts will compare the market share and performance in all Pet Industry segments by the groups responsible for the bulk of the spending in 10 demographic categories. These are the groups that we identified in our Total Pet analysis to generate at least a 60% market share of spending. As you recall, to better target the spending we altered 2 groups in Services and 1 in Food. However, to have a true side by side comparison we need to use the same groups for all. The market share dips below 60% twice, both in Food spending. One is because Food spending by Age is more balanced but skewed a little older than other segments. The other is in # of Earners, where the number of Earners in a CU mattered less. Even the low point of 55.1% is within 5% of our target and 96% of all measurements meet or exceed the 60% requirement, so the comparison is very valid.

The chart makes it especially easy to compare 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.

  • White, Non-Hispanic – This group has an 83+% market share in every Segment. Minorities account for 32.8% of CUs but only 15>17% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. Whites lost 2>4% in share in all segments but Supplies which fell 0.1%. Hispanics made the biggest gains. Asians also had increases but African Americans generally lost ground.
  • 2+ People in CU – 2+ is still the key in pet ownership. However, the results were mixed by size. Singles lost ground in all but Food so 2+ CUs had the opposite pattern. 2 People had big gains in all but Supplies. 3 People had big drops in all but Food. 4 People gained in Supplies and Veterinary but fell in Services and plummeted -18.7% in Food which produced the biggest drop in Total Pet. 5 People were up in all but Food. Truly, a mixed bag by CU size.
  • Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. This group’s share of Total Pet fell below 80% for the first time in 2018. It bounced back in 2019>20 but fell 3 points in 2021. All but Services lost share with Food having the biggest drop, -5.7%. Services gained 2% and is again above 80%. Supplies remains at the bottom. Those w/o Mtge drove the big decrease.
  • Suburban & Rural – They gained 0.2% in Total Pet. Both the Suburbs 2500> and Areas <2500 had strong gains in Veterinary but the other segments were divided. The Big Suburbs had strong gains in Food, Supplies & Total but lost ground in Services. The less populated areas increased share of Services but their share fell in Food, Supplies & Total.
  • Over $70K Income – INCOME MATTERS MOST IN PET SPENDING! Income has grown in importance in recent years and all Industry segments performed at 140+%. Food lost 2% in share and replaced Supplies at the bottom in share and performance. It was the only segment with decreased share and performance. The other segments gained at least 5.6% in share, led by an 8.3% gain by Veterinary. Food spending became slightly more balanced while the income spending disparity gap significantly widened for the other segments. Services is still the least balanced.

  • Everyone Works – Income is important, and the importance of # of Earners grew for the discretionary segments, Supplies & Services. Veterinary held its ground but Food performance fell 22%, driving Total Pet below 120%. The drop in Food was due to no binge buying while the big discretionary lifts came from the record pandemic recovery.
  • College Grads – Higher education often correlates with higher income and a College degree is 2nd in spending importance for all but Food. The group grew in share and performance in all segments, but Veterinary. Veterinary lost 4.1% in share and 6.9% in performance while the product segments, led by Food, gained 18.4% in share and 37.2% in performance. Total Pet gained 13.0% in share and 26.0% in performance. College is now a key factor.
  • All Wage & Salary Earners– Incomes vary widely in this group, so performance is often lower. Supplies fell sharply in share and performance. Veterinary lost share due to fewer CUs but gained in performance. Services had slight gains in both. Food gained 12% in share and 22% in performance which pushed performance again above 100% – also for Total Pet. The group spent more in all segments, including Food but the bulk of the lifts came from White Collar.
  • Married Couples – Marriage has been important to spending in all segments. In 2021 all segments but Food & Total Pet gained in share and performance. The lift was widespread in Married segments with 1 big negative exception, Married Couples with an oldest child 18 or older.
  • 35 to 64 yrs – Includes the 3 highest income segments. This group had the same pattern of gains/losses as CU Composition – Food & Total down, all other segments up. The “bad guys” were 55>64 yr-olds. However, Food is a little more balanced by Age and in fact skews a little older. 35>64 only has a 55% share of the $.

Now we’ll drill a little deeper to look at the Best and Worst performing segments in each category. Color Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2020. We will divide the categories into related groups. First, those related to Income.

  • Income – Income matters, and its importance is growing in the Industry. The Food winner was up $150>199K from $100>149K in 2020 but the disparity between first and last place fell by 80%. The disparity in Services and Veterinary was 40+% more but Supplies was up 100+%. This pushed Total Pet up +50%. Income Matters the Most.
  • # Earners – More earners = more income. 2+ Earners is the usual winner and reflects the importance of Gen X and Millennial CUs. The turmoil in Food is reflected by the No Earner, 2+ CU win. In all segments but Food & Total Pet the disparity and importance of the number of Earners grew. The biggest gain occurred in Veterinary.
  • Occupation– Mgrs & Professionals and Self-Employed are #1 and #2 in CU income and expenditures. Self-Employed binge bought food in 2020 so they were replaced by Mgrs/Professionals in 2021. The bottom spots are again occupied by either Retirees or Blue-Collar workers. No Binge in 2021 caused the disparity to drop by 100+% in Food and Total Pet. It also decreased in all but Services. Income is important in Pet Spending but how you earn it is less so.

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

  • Racial/Ethnic– As expected, White Non-Hispanics are the top performer in all segments and African Americans replaced Asians in Food so they occupy all the bottom slots. They have the lowest income and only 25% own Pets. The disparity grew sharply in Supplies so now it is basically a 100% performance difference in Total & all segments.
  • Age – The winners are all new. 35>44 had a strong year, but the winners are mixed. At the bottom in all but Supplies are <25 yr-olds. Food and Veterinary spending skew a little older. There are still big disparities in all segments but Food, which has more balanced spending at least by age, as all age groups over 35 have at least 95% performance.
  • Generation – Gen X now rules. Gen Z is at the bottom in all but Supplies, which skews younger. The disparity gap closed significantly in Food but increased by 20% in Services & Supplies. It grew by 4% in Veterinary and Total Pet.

  • Education – Winning and losing is closely tied to more and less Education which generally correlates with income. The disparities are huge. The biggest change is in Food which skewed towards lower education in the 2020 binge.
  • CU Composition – In 2021 Pet Spending was all about CUs with kids, except for Food. The oldest kid 6>17 aligns with the middle age groups. Single Parents remain at the bottom in all but Supplies and the disparities are huge, 100+%.
  • CU Size– The top CU number in Pet is now 4+ but “1” remains solidly on the bottom. 2 people CUs are still important as they replaced 4 people CUs at the top in Food & Services. The disparity is also smaller in all but Supplies.

  • Housing – We’re back to normal as Homeowners w/Mortgage and Renters are the perennial winner and loser.
  • Area– Areas <2500 population performed the best. This is surprising in Services as that usually skews towards higher population. Another surprise is Suburbs 2500> replaced Center City at the bottom in Food with a huge disparity.
  • Region – 3 new winners, but no surprises. The South is again at the bottom in all but Food.

Here are two summary charts. The first compares the averages.

The big changes in Food & Supplies are immediately apparent. The 2021 difference in Food is less than half of 2020 while it increased by 40+% in Supplies. Pre-pandemic, the performance difference grew as you moved from Products to Services, peaking in the most discretionary, Non-Vet Services. In 2021, Food flipped from highest to lowest disparity, while Supplies moved to the top. However, both Veterinary and Supplies now have a difference of 100+%. Spending became significantly less balanced in every segment but Food. While the Total Pet disparity fell, it is still high at 94%.

  • Food – After the 2020 binge, the disparity gap returned to a more normal, pre-pandemic level.
  • Supplies – The record increase produced a record disparity between best and worst.
  • Veterinary – The Winners performance grew while the losers fell pushing the difference over 100%.
  • Services – The performance gap widened but essentially returned to a normal level for this segment.

This chart shows the number of new winners/losers.

Total Pet had many changes, especially in winners. Total Pet is a sum of the segments. However, you see how influential the Pet Food segment is with the turmoil from the drop in 2021 $ after the binge buying by specific segments in 2020.

  • Pet Food spending fell because there was no repeat of the 2020 panic buying. As a result, over 80% of the winners changed and almost half of the losers are new.
  • Even with a record increase, Supplies is the most stable with very little change in top or bottom performers.
  • The Veterinary spending increase was also huge but there was also only a small number of changes.
  • Services had a strong spending recovery and some turmoil mostly on the “losing” side.

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 2020            ↕= Flipped from 1st to Last or vice versa

  • Income – All winners & losers were new with 3 flips from 1st to last. The winners returned to high income groups and the losers to low income, with 2 exceptions. In Food & Total, $100>149K lost due to Food binge buying in 2020.
  • # Earners – All new with 4 flips. In Non-Food Segments, the winner & loser were driven by income. In Food, 2+ CU Retirees finally upgraded which put them on top. They also spent more in other segments which led to a Total win.
  • Occupation – 2 were repeats while 3 flipped. In a pattern similar to # Earners, the Non-Food winners (Managers & Professionals) were high income while the losers were low income. In Food & Total we saw the winning efforts by Retirees as well as the loss for Self-Employed as they didn’t repeat their 2020 extreme Food binge buy in 2021.

Now the Age and Racial/Ethnic Categories

  • Racial Ethnic – White, non-Hispanics won in all but Food, where they were the big loser. They have high income & pet ownership and drove the 2020 Food binge so this is no surprise. African Americans have low income and Pet ownership and lost 3 times (2 were small increases). Asians have high income but had the smallest Services increase.
  • Age – All new with 3 flips. 35>44 had 3 wins while 55>64 won in Veterinary and the 75+ Retirees won in Food. <25 lost in 2 segments and 55>64 paid for their 2020 Food binge, no surprise. 45>54 was an unexpected loser in Services.
  • Generation – Gen X won Food, Supplies & Total and Millennials won Veterinary. Boomers did have the biggest increase in Services but lost in Food & Total Pet. Those born before 1946 came in last in Veterinary and Services. Gen Z did finish last in Supplies, with the smallest increase. However, winning skewed younger while losing skewed older.

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

  • Education – Higher education, especially a College degree is tied to increased income and pet spending. We had 4 flips which returned this demographic to a more normal pattern of winners & losers.
  • CU Comp. – While CUs with Children were the best performers in Total Pet and all segments but Food, 2021 was also a strong year for Married Couple Only. They had the biggest increase in Total and all segments but Supplies.
  • CU Size– Bigger CUs performed best, but with 4 last to 1st flips, 2 person CUs had the biggest increases across the board.

  • Housing – 6 flips returned Housing to a more normal pattern with Homeowners w/Mtges at the top. Renters are often at the bottom, but in 2021 those w/o Mtges had 3 losses. Food & Total Pet came from their 2020 Food Binge.
  • Area – The flip winner with 8. Big Suburbs flipped to their normal spot on top in Total and 3 segments. Center City was a surprise winner in Food but the 2020 Binge put <2500 at the bottom in 2021 Food & Total. Center City losses in Supplies & Veterinary are no surprise. The <2500 loss in Services is usual, but a loss with +$0.65B lift is surprising.
  • Region – 6 flips and a more normal pattern with some exceptions. The South is an unusual Food winner and the 2020 Food binge flipped Midwest to the bottom in Food & Total. However, the strangest situation was that losers in 3 categories spent more, 2 with lifts of a $B or more. The big winner was the West and Midwest was the big loser.

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.

  • 3 Segments were up a lot while Food $ fell. The overriding pattern was turmoil.
  • In terms of repeats Supplies (5) and Veterinary (8) led the way while Food and Services had NONE!
  • Due to the 2020 binge, Food led the way in flips (17) with all 2020 winners flipping to last in 2021. Services was 2nd (12). Veterinary had the fewest flips (3) while Supplies had (6) but 5 of the Supplies flips were from last to 1st.
  • You can see how the combined segments put Total Pet in turmoil – 17 flips and only 1 repeat
  • There are a total of 24 winners and losers. The number different from 2020 was: Food: 24; Supplies: 19; Veterinary: 16; Services: 24; Total: 23. It appears that the record recovery caused as much or more turmoil than the pandemic.

Next, there were so many positive contributors that in each individual report we recognized 6 segments that didn’t win but still performed so well that they deserved Honorable Mention. I reviewed that list again and came up with segments that won Honorable Mention at least twice. Here are the 9 “SUPER Honorable Mentions” for 2021…

You can immediately see that it was an unusual year as 9 segments made the list. Supplies had the biggest increase, +57% and led the way with 6 segments on the list. Supplies became more skewed towards higher income but 97% of demographic segments spent more. Except for Millennials, the segments on the list are generally “low profile” but contributed notably to the industry. We should give special kudos to Millennials, Renters and Unmarried 2+ All Adult CUs. These 3 groups won Honorable Mention in 2 Industry segments and Total Pet.

Although the results were mixed, with numerous individual changes, I saw these trends of note:

  1. Youth Movement – Boomers must inevitably fade. The Gen Xers have stepped up, with the Millennials close behind.
  2. Sub-Urbanization – The Suburbs are the key. Areas <2500 are the top performers but the Suburbs 2500> spend the most. With the exception of pandemic 2020, they are the only area that increased $ every year since 2016.
  3. The “Magic” number is 4+ – As spending skews younger the best performers in all but Food tend to be larger CUs. However, 2 person CUs still have the largest share of $ in every segment and Total Pet. They’re not done yet.
  4. Changes in spending balance – The performance gap between the best and worst narrowed in Food but expanded in the other segments, especially in Supplies. This happened despite a demographically widespread increase.
  5. Income is still the most important factor – The gap between best and worst narrowed in Food, but widened in all other segments, again especially in Supplies. The best performer is always $150K+, while the worst is <$30K.

And Finally, What you have all been waiting for…

THE ULTIMATE 2021 PET SPENDING CUs – Side by Side

Color Highlighted cells are different from Total Pet; * = New in 2021

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 continues to increase. It’s now 4+ people in a CU

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

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

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

Generation– Boomers have passed the torch to Gen X. Age Note: All 45>54, 50% of 35>44 and 20% of 55>64 are Gen X.

I hope that this Visual Comparison helped you to get a “satellite view” of Pet Industry Spending in 2021. Please refer back to the individual segment reports to get more details.