Petflation 2024 – May Update: Slows to +1.6% 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>May 24. However, the CPI slowed in May to +3.3% from +3.4% in April. Grocery prices fell slightly, -0.01% from April and inflation slowed to 1.0% from 1.1%. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 15 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 at 1.6% in May, it is -51.5% below the national rate, a big change from +52% in January. 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 May 22 to May 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 May, Pet prices were up 0.1% from April. All but Food were up, with Services leading the way, +1.5%.

In May 22, the CPI was +13.7% and Pet prices were +10.5%. Like the CPI, 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 other segments had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices continued to grow while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month except for 1 dip by Supplies. In May Products prices grew while Services slowed. In Jun/Jul this reversed. In August all but Services fell. In Sep/Oct this was reversed. 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.

• 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>May 24, but 31% of the 22.2% increase in the 53 months since Dec 2019 happened from Jan>Jun 2022 – 11.3% of the time.
• Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up & peaked in May 23. In Jun>Aug they fell, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell Apr>May. 97% of the 22.0% lift came in 22 & 23.
• Pet Supplies – Supplies prices were high in Dec 19 due to tariffs. They then had a “deflated” roller coaster ride until mid-21 when they returned to Dec 19 prices and essentially stayed there until 22. They turned up in Jan and hit an all-time high, beating the 2009 record. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct setting a new record. Prices stabilized in Nov>Dec but grew in Jan>Feb 23. They fell in Mar, but set a new record in May, then continued the rollercoaster with Dec>Feb lifts, Mar/Apr drops & a May lift.
• 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 stronger in 22 but prices got on a rollercoaster in Mar>Jun. They turned up Jul 22>Mar 23 but the increase slowed in April and prices fell in May. They rose Jun>Aug, fell Sep>Dec, rose Jan>Mar, fell in Apr and rose in May.
• Veterinary – Inflation has been consistent. Prices turned up in Mar 20 and grew through 21. A surge began in Dec 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the CPI. However, prices rose again and despite some dips they have stayed above the CPI since July 22. In 23, prices grew Jan>May, stabilized Jun/Jul, fell in Aug, grew Sep>Dec, fell in Jan 24, but set records in Feb>May.
• Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in Nov. In December prices turned up and grew through March to a new record high. Prices fell in April then rose in May, but Petflation is again about half of the National CPI.

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>24 & 19>24. Petflation fell to 1.6%, down from 1.7% in April. It is again 50% below the National rate. In January, it was +52%. 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 +0.2% from April but were +3.3% vs May 23, down from +3.4% last month because there was a bigger Apr>May price lift in 23. Grocery inflation also fell slightly to +1.0% from +1.1%. Only Pet Food & Groceries had a price decrease from last month. There were 4 drops in April – all Pet. The national YOY monthly CPI rate of 3.3% is down from 3.4% and 83% of the 22>23 rate but only 38% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Medical & Pet Services. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 2 segments – Medical Services & Haircuts – both Services categories. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 102% 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 +5.2% while the CPI for Commodities is +0.1%. This clearly shows that Services are driving almost all of the current 3.3% inflation rate.

• U.S. CPI– Prices are +0.2% from April. The YOY increase is 3.3%, down from 3.4%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 65+% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 of 6 with drops – still not good! The current rate is 17% below 22>23 but the 21>24 rate is still 16.7%, 73.9% of the total inflation since 2019. Inflation was low in early 2021.
• Pet Food– Prices are -0.1% vs April and -1.1% vs May 23, down from -0.1%. Now, they are significantly below the Food at Home inflation rate, +1.0%. The YOY drop of -1.1% is being measured against a time when prices were 23.3% above the 2019 level and the current decrease is still below the -0.01% drop from 2020 to 2021. The 2021>2024 inflation surge has generated 99.1% of the total 23.0% inflation since 2019.
• Food at Home – Prices are down -0.01% from April and the monthly YOY increase is 1.0%, down from 1.1%. It is radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.2% Inflation for this category since 2019 is 16% more than the national CPI but still in 4th place behind 3 Services expenditures. 74.8% of the inflation since 2019 occurred from 2021>24. This mirrors the national 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 up 0.6% from April but are -1.0% vs May 2023. They have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 months of increases pushed them to a new record high in Feb 23. Prices fell in March, rose in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again in Dec>Feb, fell in Mar>Apr, then rose in May.
• Veterinary Services– Prices are +0.3% from April and +7.6% from 2023, still the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +39.6% and since 2021, +28.2%. 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 71.2% 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 grew 0.3% from April, and they are +3.1% vs last year. Medical Services are not a big part of the current surge as only 47% of the 15.1% 2019>24 increase happened from 21>24.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices surged Jan>Mar dropped in April then rose to a record high in May, +6.4% vs 23. Inflation peaked at +8.0% back in March 23. Now, 70% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. BTW: They have the 2^nd highest 19>24 rate.
• Haircuts/Other Personal Services – Prices are +0.2% from April and +4.8% from 23. 3 of the last 5 months have been 4.0+%. Inflation has slowed but has been pretty consistent. 62% of the 19>24 inflation happened 21>24.
• Total Pet– Petflation slowed to 1.6% from 1.7% in April and is 85% less than the 22>23 rate and 52% less than the U.S. CPI. For May, 1.6% is 48% below the 3.1% average rate since 1997. Vs April, prices grew 0.1% as all but Food had increases. Services led the way with +1.5%. An Apr>May price increase has happened in 22 of the last 27 years, so this month’s data was not surprising. In terms of Petflation, 2024 appears to be returning to a more normal pattern. However, the path to get there may 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 +4.5% or higher.

• U.S. CPI – The 23>24 rate is 3.3%, the same as April, but down 38% from 22>23 and 60% less than 21>22. It is also 21% below the average YOY increase from 2019>2024, but it’s still 63% more than the average annual increase from 2018>2021. 78% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
• Pet Food – Ytd inflation is 1.6%, down from 2.2% in April and 89% less than the 22>23 rate. Now, it is also 72% lower than 21>22 and 14% below the average rate from 2018>2020. 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. 94% of the inflation since 2019 occurred from 2021>24.
• Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down over 87% from 22>23 & 21>22 and 56% from 20>21. Also, it is even 33% lower than the average rate from 2018>20. It remains in 3rd place for the highest inflation since 2019 but still beat the U.S. CPI by 15%. You can see the impact of supply chain issues on the Grocery category as 78% of the inflation since 2019 occurred from 2021>24.
• Pets & Pet Supplies – Prices increased Jan>Feb, fell Mar>Apr then rose in May. The 2024 inflation rate of 0.1% is only higher than the -1.6% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 7.0% in 22 & 5.5% in 23. The 2021 deflation created a unique situation. Prices are up 11.4% from 2019 but 114% of this increase happened from 2021>24. Prices are up 13.0% 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 at the start of 2024, +8.3%, 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 1.9%. 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 a drop in April. The Ytd 23>24 inflation rate of 5.1% is 2^nd to Veterinary in the Pet Industry. It is 29% less than 22>23 and 16% below 21>22. However, it is still 1.6 times higher than the 2018>21 average rate. Pet Services is 2^nd in 19>24 inflation but only 5^th in inflation since 2021.
• Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 4.3%, which is 23% below the 20>21 peak but 39% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
• Total Pet – Ytd Petflation is 3.0%, down from 3.4%. It is 71% less than 22>23 but 32% higher than the 2018>21 average rate. However, it is now 9% below the CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food inflation rates but Supplies inflation is also slowing. Services and Veterinary prices both reached record highs in May, but it was not enough to overcome the YOY monthly deflation in products.

Petflation is definitely slowing. May was 66% below the average for the month and 52% lower than the National CPI. This is about the same as it was back In 2021. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.2% above 2021 and 25.6% higher than 2019. Those are big lifts. In fact, in May prices for Vet & Serv set new records. Total Pet is only 0.1% below the highest in history. Food prices are 1.1% below their peak and Supplies prices are 1.0% lower. Only Supplies prices (+10.3%) are less than 23% 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 likely 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 GPE 24 where a record number of exhibitors offered OEM services. Strong, cumulative inflation has a widespread impact.