Petflation 2023 – January Update: Price increase slows to +10.6% vs 2022

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. January prices grew 0.8% from December and the CPI was still up +6.4% vs 2022, but down from +6.5% last month. The grocery price surge also slowed but they’re still up 11.3% over 2022. That’s 11 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 +10.6% in January, 65.6% higher than the national rate of 6.4%. 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
• Since January data is YTD, we won’t have separate YTD data until next month. It will include:
  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 January 2021 to January 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. For all but Supplies, cumulative inflation peaked in January. I have added and highlighted the month that Supplies peaked. This will give you some key waypoints.

The pandemic hit home in 2020. In January 21, the national CPI was only +1.8% and Pet prices were +1.2%. 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 August>October 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 January, 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 January but 41% of the overall 16.4% increase since 2019 happened from January>June 2022.
• Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December 2021 but 89% of the 17.3% increase occurred in 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.
• 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>Jan and passed Food for 2^nd 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 hit a new record in January.
• 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 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 January 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 inflation is slowing, it’s not over. This will allow you to see the cumulative amount of the current pricing surge. You can compare the annual 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 +0.8% vs December and were up 6.4% vs January 2022. The Grocery increase is down to 11.3% but is still a big negative. January prices generally rise from December so it’s not surprising that 8 of 9 categories had increased prices from last month. 5 of the increases were over 0.5%. Last month there was only 1. 2 of the increases were over 1.0% and the Pet Industry again led the way – Pet Services +1.5% and Veterinary Services +1.0%. The overall national YOY monthly inflation rate is slightly down from December but it is significantly down vs the 21>22 rate. No other category has that pattern. The 22>23 inflation rate is higher than the 21>22 rate in all other categories. In all but 2 – Medical Services and Haircuts/Personal Services, it is the highest rate in any year since 2019. In our new 21>23 measurement you also can see that over 75% 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 very interesting situation. The 21>23 inflation surge provided 113% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

Now Some Specific Observations

• U.S. CPI– Prices are +0.8% from December. The YOY increase is down to +6.4%. 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, a 7th 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 +0.2% vs December and 15.1% vs January 2022. They are also 34% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 1.9% above the 2019 level, but that increase is still an incredible 12.5 times the pre-pandemic 1.2% increase from 2018 to 2019. The 2021>2023 inflation surge generated 88% of the total 20.7% inflation since 2019.
• Food at Home – Prices are up 8% from December. The monthly YOY increase is 11.3%, down slightly from 11.8% in December but considerably lower than Jul>Sep 2022 when it exceeded 13%. The 24.9% Inflation for this category since 2019 is the highest on the chart and is 32% more than the national CPI. 79% of their inflation since 2019 occurred from 2021>2023 but their 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 +0.4% from December. That’s 2 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, 2 straight months of increases has put them within 0.4% of the record high.
• Veterinary Services – January prices are +1.0% from They are +8.4% from 2022 and are tied with Services for 2^nd place behind Food in the Pet Industry. They also remain 2^nd in the increase since 2019 with 24.5% 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 but only 57% 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 January prices fell -0.1% from December but were +3.0% vs 2022, the 2^nd highest rate since 2019. Medical Prices are not a big part of the current surge as only 40% of the 2019>23 increase happened from 21>23.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. January prices were up +1.5% from December, the biggest increase on the chart, and +8.4% vs 2021, a new rate record and an all-time pricing high. Their inflation is tied to the current surge as 72% of total since 2019 occurred from 2021>2023.
• Haircuts & Other Personal Services – Prices are +0.2% from December and +5.2% from 2022, but this is only 2^nd to +5.7% in 20>21. Inflation began to grow in 20>21 and 50% of the inflation from 19>23 happened from 21>23.
• Total Pet– Petflation is strong, 2.4 times the rate of last year, 65.6% ahead of the National CPI and the +10.6% is also the highest January rate in history. Prices increased in all segments vs December so Total Pet was up 0.8%, which is actually the norm. A Dec>Jan increase in Petflation has happened in 25 of the last 26 years. Food is the runaway leader, but inflation is becoming more balanced as all other segments have aa YOY rate of 7.2>8.4%. Inflation can cause reduced purchase frequency in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying a lot and it is needed every day.

YOY Petflation slowed slightly in January from December but still set a new record for the month. Will it impact spending? Let’s put it into perspective. The 10.6% January 2023 increase in Total Pet beat the 10.3% record set in 2009 and is 6+ times more than the 1.5% average rate from 2010>2021. Pet spending continues to move to higher income groups, but the impact of inflation varies by segment. Supplies is the most affected as many categories are 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 reduction in visit frequency. The Services segment is the most driven by higher incomes, so inflation is less impactful. 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 aggregates. During our conversations, they noted that Pet expenditures had one of the biggest share gains of any group. Apparently, Pet Parents are just reallocating their $ to prioritize their “children’s” needs. This is not unexpected. We’ll see if it is impacted by continued high inflation.