Petflation 2024 – September Update: Drops to +2.1% vs 2023

The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec 23, then turned up Jan>Sep 24. Despite a 0.2% increase in prices from August, the CPI slowed in September to +2.4% from +2.5% in August. Grocery prices rose 0.4% from August and inflation grew to 1.3% from 0.9%. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 19 consecutive months below 10%. As we have learned, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Petflation was +4.1% in December 2021 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed considerably since June 2022, but Petflation generally increased until June 2023. It passed the National CPI in July 22 but fell below it from Apr>Jul 24. It exceeded the CPI in August, but in September it is again below it. We will look deeper into the data. The reports will include:

• A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
• Monthly comparisons of 24 vs 23 which will include Pet Segments and relevant Human spending categories. Plus
  1. CPI change from the previous month.
  2. Inflation changes for recent years (22>23, 21>22, 20>21, 19>20, 18>19)
  3. Total Inflation for the current month in 2024 vs 2019 and vs 2021 to see the full inflation surge.
  4. Average annual Year Over Year inflation rate from 2019 to 2024
• YTD comparisons
  1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from September 22 to September 24. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in segment patterns and compare them to the overall U.S. CPI. The year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In September, Pet prices were down -0.4% from August. The price drop was driven by Pet Products. Prices in both of the Services segments were up.

In September 22, the CPI was +15.5% and Pet was +14.6%. Prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices consistently grew but the others had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices grew while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month for all segments except for 1 dip by Supplies. In May Products prices grew while Services slowed. In Jun/Jul this reversed. In Aug all but Services fell. In Sep/Oct this flipped. In Nov, all but Food & Vet fell. In Dec, Supplies & Vet  drove prices up. In Jan>Mar 24 Pet prices grew despite a few drops. In April, prices in all but Vet fell. In May, all but Food grew. In June, Products drove a lift. In July, all but Services fell. In August, Food drove a small drop in Pet prices. In September, Pet Products fueled a drop.

• U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 21 and continued to grow until flattening out in Jul>Dec 22. Prices turned up Jan>Sep 23, dipped in Oct>Dec, then rose Jan>Sep 24, but 31.1% of the 22.7% increase in the 57 months since December 2019 happened from Jan>Jun 2022 – 10.5% of the time.
• Pet Food – Prices were at December 19 levels from Apr 20>Sep 21. They grew & peaked in May 23. In Jun>Aug they fell, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell Apr>May, grew in June, then fell in Jul>Sep. 99% of the lift was in 22/23.
• Pet Supplies – Supplies prices were high in December 19 due to tariffs. They had a “deflated” roller coaster ride until mid-21 when they returned to Dec 19 prices & essentially stayed there until 22. They turned up in January and hit a record high, beating 2009. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct to a new record. Prices stabilized in Nov>Dec but grew in Jan>Feb 23. They fell in March, but set a new record in May. The rollercoaster continued with Dec>Feb lifts, Mar/Apr drops, May/Jun lifts, a July drop, an August lift & a September drop.
• Pet Services– Inflation is usually 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but with fewer outlets. Inflation grew in 21 with the biggest lift in Jan>Apr. Inflation was strong in 22 but prices got on a rollercoaster in Mar>Jun. They turned up Jul to Mar 23 but the rate slowed in April and prices fell in May. Jun>Aug: ↑, Sep>Dec: ↓, Jan>Mar: ↑, Apr: ↓, May: ↑, June: ↓, Jul>Sep: ↑.
• Veterinary – Inflation has been consistent. Prices turned up in March 20 and grew through 21. A surge began in December 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the CPI. However, prices rose again and despite some dips they have stayed above the CPI since July 22. In 23>24 prices grew Jan>May, leveled Jun/Jul, fell in Aug, grew Sep>Dec, fell in Jan, grew Feb>May, fell Jun>Jul, then grew Aug>Sep.
• Total Pet – Petflation is a sum of the segments. In December 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in November. In December prices turned up and grew through March 24 to a record high. Prices fell in April, rose in May>June (a record) then fell in Jul>Sep, but Petflation is again below the National CPI.

Next, we’ll turn our attention to the Year Over Year inflation rate change for September and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation fell to 2.1%, from 2.8% in August, and it is now +12.5% below the National rate. Last month, it was +12.0%. The chart will allow you to compare the inflation rates of 23>24 to 22>23 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. We’ve included some human categories to put the pet numbers into perspective.

Overall, prices were up 0.2% from August and were +2.4% vs September 23, down from +2.5% last month because there was a bigger Aug>Sep price lift in 2023 than in 2024. Grocery inflation rose to +1.3% from 0.9%. Only 3 segments had price decreases from last month – Pet Food, Pet Supplies & Total Pet. There were also 3 drops in August, but 5 in July. The national YOY monthly CPI rate of 2.4% is down from 2.5%. It is 35% below the 22>23 rate and 71% less than 21>22. The 23>24 rate is below 22>23 for all but Pet Supplies & Medical Services. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 3 segments – Medical Services, Haircuts & Grocery. 2 are Services categories. Service Segments have generally had higher inflation rates so there was usually a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 93% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +4.7% while the CPI for Commodities is -1.3%. This clearly shows that Services are driving all of the current 2.4% inflation.

• U.S. CPI– Prices are +0.2% from August. The YOY increase is 2.4%, down from 2.5%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 20+% higher than the target. In the last 12 months, we had 3 lifts and 9 drops, including 6 consecutive drops from Apr>Sep – much better. The current rate is below 22>23 but the 21>24 rate is still +14.9%, 65.4% of the total inflation since 2019. Inflation was starting in September 2021, +5.4%
• Pet Food– Prices are -0.3% vs August and -0.9% vs September 23, down from -0.4% last month. They are still significantly below the Food at Home inflation rate of +1.3%. The YOY drop of -0.9% is being measured against a time when prices were 23.1% above the 2019 level and the current decrease is slightly more than the -0.8% drop from 2019 to 2020. The 2021>2024 inflation surge generated 96% of the 22.4% inflation since 2019, down from 100+%. Inflation began in 2021.
• Food at Home – Prices are up 0.4% from August and the monthly YOY increase rose from 0.9% to 1.3%. This is still radically lower than Jul>Sep 2022 when it exceeded 13%. The 27.4% Inflation for this category since 2019 is 20.2% more than the national CPI but in 3rd place behind 2 Services expenditures. 62.8% of the inflation since 2019 occurred from 2021>24. This is lower than the CPI, but we should note that Grocery prices began inflating in 2020>21 then the rate accelerated. It appears that the pandemic supply chain issues in Food which contributed to higher prices started early and foreshadowed problems in other categories and the overall CPI tsunami.
• Pets & Supplies– Prices were -0.5% from August and inflation fell to +1.5% vs September 23 from 3.1% in August and… they have the lowest rate vs 2019. Prices were deflated for much of 20>21. As a result, the 2021>24 inflation surge accounted for 88.7% of the total price increase since 2019. Prices set a record in October 2022 then deflated. 3 monthly increases pushed them to a new record high in February 23. Prices fell in March, rose in Apr/May to a new record, fell in Jun>Aug, grew Sep>Oct, fell in November, grew Dec>Feb, fell Mar>Apr, rose May>Jun (record), fell in July, rose in August, then fell in September.
• Veterinary Services– Prices are +0.1% from August and +6.7% from 2023. They fell to #2 in inflation vs 23 but are still the leader in the increase since 2019 with +37.4% and since 2021, +28.1%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 22 & 23. It is still high in 24, so 75.1% of the cumulative inflation since 2019 occurred from 2021>24.
• Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. Prices rose +0.6% from August and inflation vs last year rose to +3.6% from +3.2%. Medical Services are not a big part of the current surge as only 54.3% of the 13.8%, 2019>24 increase happened from 21>24.
• Pet Services – Inflation slowed in 2020 but began to grow in 21. In 24, prices surged Jan>Mar, fell in April, rose in May, fell in June, then rose Jul>Sep. Inflation peaked at +8.0% in March 23. In September, it was 7.3%, up from 6.3%. 69% of their total 19>24 inflation has occurred since 21. In December 23, it was 49%. Plus, they now have the highest 23>24 rate.
• Haircuts/Other Personal Services – Prices are +0.1% from August and +4.8% from 23. 7 of the last 9 months have been 4.0+%. Inflation has been pretty consistent. Just 56.4% of the 19>24 inflation happened 21>24.
• Total Pet– Petflation fell to 2.1% from 2.8% due to price drops in Products. It is still 63% less than the 22>23 rate and now 12.5% less than the U.S. CPI. 2.1% is 33.6% below the 3.1% average September rate since 1997. Vs August, prices fell -0.4%, driven by Food & Supplies. The biggest Aug>Sep price decrease, -0.5% was in 2020 but a drop has occurred in only 5 of the last 20 years, so this month’s data was a bit surprising. In terms of Petflation, 2024 appears to be moving back towards a more normal pattern. However, the path to get there will be unusual and there is still a ways to go.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – All Pet – Pet Food, Services, Veterinary & Total Pet. The 23>24 rate is usually much lower than 22>23 for all but Medical Services. 21>22 still has the highest rate for Food at Home, the CPI & Pet Supplies. The average annual national inflation in the 5 years since 2019  is 4.2%. Only 2 of the categories are below that rate – Medical Services (2.8%) and Pet Supplies (2.2%). It comes as no surprise that Veterinary Services has the highest average rate (6.7%), but all 5 other categories are +4.4% or higher.

• U.S. CPI – The 23>24 rate is 3.0%, down from 3.1% in August. It is also down 32% from 22>23, 64% less than 21>22 and 29% below the average YOY increase from 2019>2024. However, it’s still 30% more than the average annual increase from 2018>2021. 73% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
• Pet Food – Ytd inflation is 0.7%, down from 0.9% in August and 94% less than the 22>23 rate. Now, it is also 92% lower than 21>22 and 38% below the average rate from 2018>2021. Pet Food has the highest 22>23 rate on the chart and remains in 2^nd place in the 21>24 rates. Deflation in the 1^st half of 2021 kept YTD prices low then prices surged in 2022 and especially in 2023. 96% of the inflation since 2019 occurred from 2021>24.
• Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down 82% from 22>23, 91% from 21>22 and 58% from 20>21. Also, it is even 49% lower than the average rate from 2018>20. It is tied for 3rd place for the highest inflation since 2019 but still beat the U.S. CPI by 17%. You can see the impact of supply chain issues on the Grocery category as 73% of the inflation since 2019 occurred from 2021>24.
• Pets & Pet Supplies – Prices rose Jan>Feb, fell Mar>Apr, rose May>Jun, fell in July, rose in August, then fell in September. Inflation in 2024 is 0.7% and is only higher than 19>20 & 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 7.3% in 22 & 3.8% in 23. The 2021 deflation created a unusual situation. Prices are up 11.3% from 2019 but 107% of this increase happened from 2021>24. Prices are up 12.1% from their 2021 “bottom”.
• Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. The rate may have peaked in 2023, but it is still going strong in 2024, +7.6%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.7%, they have the highest average annual inflation rate since 2019. It is 1.6 times higher than the National Average but 2.4 times higher than the Inflation average for Medical Services. Strong Inflation is the norm in Veterinary Services.
• Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. Ytd it is 2.5%. In a non-pandemic year, “normal” is between 2.1>2.9%. We are still seeing the impact of 2023 when prices actually deflated (-0.3%). This was the only deflationary year since the US BLS began tracking this category in 1935.
• Pet Services – After falling in late 2023, prices surged in 2024, except for drops in Apr & Jun. The 23>24 inflation rate of 5.8% is 2^nd to Veterinary on the chart. It is 15% less than 22>23 and 3% below 21>22. However, it is still 1.8 times higher than the 2018>21 average rate. Pet Services is 2^nd in 19>24 inflation but only 4^th in inflation since 21.
• Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 4.5%, which is 15% below its 21 peak, but 32% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
• Total Pet – Ytd Petflation is 2.7%, the same as Jul>Aug. It is 70% less than 22>23 but 16% higher than the 2018>21 average rate. Plus, YTD it is still 10% below the CPI. Despite the YOY lift in August, Petflation has slowed in 24. This is primarily being driven by drops in Pet Food prices, but Ytd Supplies inflation is also low. Services prices set a new record in September and Vet prices grew. The mixture of patterns produced stability in the August & September Ytd Total Pet CPIs.

The Petflation recovery paused in August then came back in September. At 2.1%, September was 33.6% below the average rate for the month since 1997 and is again lower than the National CPI. However, we should remember that the 1997>2023 CPI average includes 2 inflation surges – the recent price tsunami and one caused by the melamine crisis. The years from 2010 to 2021 were “normal”. The average September Petflation rate during those years was 1.6%. That means that the current rate of 2.1% is down but still 33% higher than “normal”. We also continue to focus on monthly inflation while ignoring one critical fact. Inflation is cumulative. Pet prices are 19.9% above 2021 and 24.8% higher than 2019. Those are big lifts. In fact, in September, prices for Services set a new record while prices for Total Pet & all other segments are less than 1.2% below the highest in history. Only Supplies prices (+10.6%) are less than 22% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Services will be the least impacted as it is driven by high income CUs. Veterinary will see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies will likely see a reduction in purchase frequency and some Pet Parents may even downgrade their Pet Food. Products will see a strong movement to online purchasing and private label. We saw evidence of this at both GPE 24 & SZ 24 as a huge # of exhibitors offer OEM services. Strong, cumulative inflation has a widespread impact.