Petflation 2025 – January Update: Stable at +2.0% vs Last Year

The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until it turned up in Jul/Aug 2023. Prices fell in Oct>Dec 23, then turned up Jan>Oct 24. Prices fell -0.1% in Nov, but rose 0.04% in Dec and 0.7% in Jan 25. The CPI rose to +3.0% from +2.9% in December. Grocery prices rose 0.8% from December but YOY inflation only grew from 1.8% to 1.9%. After 12 months of 10+% YOY monthly increases, grocery inflation has now been below 10% for 23 months. 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 Dec 21 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 22. National inflation has slowed considerably since then, but Petflation generally increased until June 23. It passed the CPI in July 22 but fell below it from Apr>Jul 24. It exceeded the CPI in August, fell below in Sep>Oct, rose above in Nov, then fell below in Dec>Jan 25. As we drill into the data, all 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 (Note: January = YTD, so there will be no separate YTD report this month.)
  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 Jan 23 to Jan 25. 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 from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In January, Pet prices were up 0.4% from December. Food (+0.5%) & Vet (+0.3%) were up while Supplies (-0.2%) & Services (-0.1%) were down.

In Jan 23, the CPI was +16.4% and Pet was +16.8%. The Services segments inflated after mid-20, while Product inflation stayed low until late 21. In 22, Food prices grew but the others had mixed patterns until July 22, when all rose. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food inflated while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month for all segments except for 1 Supplies dip. 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, Supp. & Vet  drove prices up. In Jan>Mar 24 Pet prices grew. 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 Aug, Food drove a drop. In Sep, Products fueled a drop. In Oct, Services drove a lift. In Nov, all were up. In Dec, Total Pet fell. In Jan, the segments were split but Total Pet prices hit a record high.

• 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 rose Jan>Sep 23, fell Oct>Dec, rose Jan>Oct 24, fell Nov, then rose Dec>Jan to a record high but 28.8% of the increase since Dec 19 happened from Jan>Jun 22 – 10% of the time.
• Pet Food – Prices were at the Dec 19 level from Apr 20>Sep 21. They grew & peaked May 23. Jun>Aug ↓, Sep>Nov↑, Dec>Feb↓, Mar↑, Apr>May↓, June↑, Jul>Oct↓, Nov↑, Dec↓, Jan 25↑. 99% of the lift was in 22/23.
• Pet Supplies – Supplies prices were high in Dec 19 due to tariffs. They had a deflated rollercoaster ride until mid-21 when they returned to Dec 19 prices & essentially stayed there until 22. They turned up in Jan 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 Mar, but set a new record in May. The rollercoaster continued with Dec>Feb↑, Mar/Apr↓, May/Jun↑, July↓, Aug↑, Sep/Oct↓, Nov/Dec↑, Jan 25↓.
• 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>Mar 23 but the rate slowed in April and prices fell in May. Jun>Aug↑, Sep>Dec↓, Jan>Mar 24↑, Apr↓, May↑, June↓, Jul>Nov↑, Dec>Jan 25↓.
• 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>24 prices grew Jan>May, leveled Jun/Jul, fell Aug, grew Sep>Dec, fell Jan, grew Feb>May, fell Jun>Jul, grew Aug>Jan 25.
• 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 Sep/Oct, then fell in Nov. In December prices turned up and grew through March 24 to a record high. Prices fell in April, rose May>June (record), fell Jul>Sep, rose Oct>Nov, fell in Dec, then rose in Jan 25 (record high).

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 will also show total inflation from 21>25 & 19>25. Petflation was stable at 2.0% in January and it is again below the National inflation rate (by -33.3%). The chart will allow you to compare the inflation rates of 24>25 to 23>24 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 0.7% from December and were +3.0% vs Jan 24, up from +2.9% last month. Grocery inflation rose to +1.9% from 1.8%. Only 2 expenditures had price decreases from last month – both Pet: Supplies & Services. There were 2 drops in Oct/Nov but 3 in Aug/Sep & Dec and 5 in July. The national YOY monthly CPI rate of 3.0% is up from 2.9%, but it is  3% below the 23>24 rate and 60% less than 21>22. The 24>25 rate is above 23>24 for 5 – Groceries, Pet Supplies, Med. Services, Pet Services & Haircuts. In our 2021>2025 measurement you also can see that over 80% of the cumulative inflation since 2019 has occurred in 6 segments, 4 are Pet – all but Vet, plus Groceries & the CPI. Except for Pet Services, where prices have surged, Service Segments have had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>25 inflation surge provided 95% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures account for 63.8% of the National CPI so they are very influential. Their current CPI is +4.2% while the CPI for Commodities is 0.8%. This clearly shows that Services are driving almost all of the current 3.0% inflation. The situation in Pet is even worse. Petflation: 2.0%. The CPI for the 2 Service Segments is 5.9%. The Pet Products CPI is -0.7%.

• U.S. CPI– Prices are +0.7% from Dec. The YOY increase is 3.0%, up from 2.9%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are now 50+% higher than the target. The January increase was the 4th straight lift after 6 consecutive drops from Apr>Sep. The current rate is below 23>24 but the 21>25 rate is still +21.4%, 81.7% of the total inflation since 2019. The Inflation surge hadn’t started in January 2021, +1.4%
• Pet Food– Prices are +0.5% vs Dec. but -1.1% vs Jan 24, up from -1.7%. They are still far below the Food at Home inflation rate of +1.9%. The YOY drop of -1.1% is being measured against a time when prices were 20.0% above the 2019 level but the current decrease is still more than double the -0.5% drop from 2020 to 2021. The 2021>2025 inflation surge generated 90% of the 25.1% inflation since 2019. Inflation began in June 2021.
• Food at Home – Prices are up +0.8% from December but the YOY increase only grew from 1.8% to 1.9%. This is radically lower than Jul>Sep 2022 when it exceeded 13%. The 28.8% Inflation for this category since 2019 is 10% more than the national CPI but only in 4th place behind 3 Services expenditures (2 Pet). 81% of the inflation since 2019 occurred from 2021>25. 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 -0.2% from December and YOY inflation fell to +0.6% from 1.5%. They still have the lowest rate vs 2019. Prices were deflated for much of 20>21. As a result, the 2021>25 inflation surge accounted for 111% of the total price increase since 2019. Prices set a record in October 2022 then deflated. 3 monthly increases pushed them to a record high in Feb 23. Prices fell in March, rose Apr/May (record), fell Jun>Aug, grew Sep>Oct, fell Nov, grew Dec>Feb 24, fell Mar>Apr, rose May>Jun (record), fell July, rose Aug, fell Sep>Oct, rose Nov>Dec, fell in Jan 25.
• Veterinary Services– Prices are +0.3% from December and +6.6% from 2024, up from 6.2% last month. They are now #1 in inflation vs 24 and still the leader in the increase since 2019 with +45.5% and since 2021, +33.0%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & 24. It also has the highest rate in 25, but only 72.0% of the cumulative inflation since 2019 occurred from 2021>25.
• 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 +0.3% from December, but inflation vs last year slowed to +2.7% from +3.4%. Medical Services are not a big part of the current surge as only 50.8% of the 18.3%, 2019>25 increase happened from 21>25.
• 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, rose Jul>Nov, then fell in Dec>Jan 25. In Jaanuary, their rate plummeted from 11.5% to 5.5% and they fell from #1 to #2 in YOY inflation. However, 81.2% of their total 19>25 inflation has occurred since 21. In Dec 23, it was 49%.
• Haircuts/Other Personal Services – Prices are +0.5% from Dec and +4.6% from Jan 24. 11 of the last 13 months have been 4.0+%. Inflation has been pretty consistent. 64.7% of the 19>25 inflation happened 21>25, 66.7% of the time.
• Total Pet– Petflation was unchanged at 2.0%. 2 segments had a higher rate and 2 were lower. It is 57% less than the 23>24 rate and 33% below the U.S. CPI. Plus, 2.0% is 35.5% below the 3.1% average January rate since 1997. Jan prices rose 4%, driven by Food & Vet. The Dec>Jan increase was equal to the 97>24 average change and expected. A drop has only occurred in 2 of the last 27 years. The big factor in the CPI stability was that prices also rose 0.4% in Dec>Jan 24. In January, the recovery continued, and we are getting closer to a full recovery.

The Petflation recovery paused in August  24, came back Sep>Oct, paused in November, then resumed in Dec>Jan 25. At 2.0%, January was 35.5% below the 27 yr 97>24 average. We tend to focus on the monthly YOY inflation in the current year and forget that what happened last year is a big factor in determining the current inflation rate. In Dec>Jan, Pet prices rose 0.4% but the YOY rate was stable at 2.0%… because prices also rose 0.4% in 2024. We also ignore the fact that inflation is cumulative. Pet prices are 23.3% above 2021 and 28.6% higher than 2019. Those are big lifts. In fact, January prices reached a record high for Veterinary and Total Pet. All other segments are within 1.5% of the highest price in history. Only Supplies prices (+12.3%) are less than 25.1% 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 the segment most  driven by high income CUs. Veterinary will likely continue to see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies are more discretionary so we will likely see a reduction in purchase frequency. In Pet Food, the most needed segment, some Pet Parents may even downgrade their Pet Food. However, the biggest impact in both product segments will be a strong movement to online purchasing and private label. We saw proof of this at both GPE 24 & SZ 24 as a huge # of exhibitors offer OEM services. At GPE 25, this trend will continue. Strong, cumulative inflation has a widespread impact.