John Gibbons of PetBusinessProfessor.com, who compiles and analyzes “petflation” data from the US Bureau of Labor Statistics (BLS), noted in his latest December 2023 report that the YOY pet food producer price index (PPI) is down from last month, but still up compared to 2022.
In December, pet food prices reached +5.1%, down slightly from November’s figure of +5.6%. National inflation slowed significantly from June 2022, but pet food prices continued to rise through June 2023. Pet food prices passed the national Consumer Price Index (CPI) in July 2022 , and at 5.1% in December, it was still 50% above the national rate of 3.4%, Gibbons said.
When comparing pet food prices to CPI from two years ago (December 2021), CPI was +8.5% and pet food prices were +4.5%, meaning that the pet food prices more than two years ago. Gibbons noted that pet food prices have been above CPI since November 2022.
2021 compared to 2023
- US CPI – Inflation rate below 2% until 2020. It increased in Jan 2021 and continued to increase until flattening out in Jul>Dec 2022. Prices increased in Jan>Sep, then decreased in Oct>Dec , but 35% of the 19.4 % increase in the 48 months since December 2019 occurred in the 6 months from January>June 2022 – 12.5% of the time.
- Pet food – Prices were at or below Dec 2019 levels from Apr 20>Sep 2021. They grew and grew, peaking in May 2023. In Jun>Aug, they fell, grew in September>Nov, then fell in December. For pet food, 93% of the 23% increase has occurred since 2022.
YOY — 2022 vs. 2023
- US CPI– Prices are -0.1% from November. The YOY increase was 3.4%, from 3.1%. It rose to +9.1% in June 2022.
“The targeted inflation rate is <2% so we are still 55% higher than the target," explained Gibbons. "After 12 consecutive declines, we've had two lifts, a stable month, two consecutive declines, now another uptick – bad news!"
The current rate is 48% below 21>22 but the 21>23 rate is still 10%; that’s 51.5% of total inflation since 2019, but down from 54% last month. - Pet food– Prices are -0.1% compared to November and +5.1% compared to December 2022, down from 5.6%.
“[Pet food prices]however, is still 3.9 times the rate of Food and Home inflation,” Gibbons said. “The increase of 5.1% YOY is measured against a period when prices were 17% above 2019 levels, but that increase is still 1.5 times the prepandemic 3.4% increase from 2018 to 2019.”
The 2021>2023 inflation surge generated 91.3% of the total 23% inflation since 2019.
Inflation is compounded
“Petflation has slowed, but it is still strong, with the fourth-highest rate for December and the second-highest annual rate in history,” Gibbons said. “It’s also double the CPI. In 2021, that’s only half.”
Gibbons said even if pet food prices are slowing to 0%, you can’t ignore the fact that inflation is compounded. “Pet prices are 17.7% above 2021 and 22.2% higher than 2019,” he explained. “That’s a big increase. Since price/value is the biggest driver of consumer spending, it’s likely to affect the pet industry.”
Gibbons said with pet food prices continuing to rise, consumers may switch to online shopping, switch to private label or even downgrade the quality of food.
