Although inflation has eased from its worst levels in 2022, higher prices for many goods still plague consumers, economists and politicians. Take pet food, for example. In the US, its monthly year-over-year (YOY) inflation number has continued to decline since mid-2023, including in January 2024, but prices are nearly 24% higher than in January 2021 and 26.5% which is higher than in January 2019.
Of course, one of the main factors driving pet food prices is producer costs, as measured by the pet food producer index (PPI). According to data compiled and analyzed by John Gibbons, aka the Pet Business Professor, producer prices of dog and cat food have remained largely unchanged since March 2023. That would be a good thing if they were low; unfortunately, that is not the case.
Pet food producer prices have risen 28% in three years
For January 2024, pet food PPI was 6.4% YOY, down slightly from 6.6% in December. The problem is, producer costs are still 28.4% higher than in January 2021 and 30.7% higher than in January 2019. Furthermore, prices seem to have risen, at least slightly, in the spring months , so we can see the monthly increase in dog and the cost of cat food, even small ones.
“The 2023 spring PPI lift is less than in 2022. It also started two months earlier than the lift in 2022 and lasted only one month, instead of two,” Gibbons said. He added that, based on recent history, the producer prices have remained stable for nearly eight months. “The stability has now lasted 10 months, so we may have an elevator soon.”
Also, producer costs seem to only go up, rarely down. “Annually PPI Drops are uncommon, but they do happen,” explains Gibbons. “For dog and cat food, a decrease in annual PPI only happened once in the last 10 years.”
Producer price increases by subcategory of dog, cat food
In terms of the types of dog and cat food that experience higher producer prices, wet is the worst for the dog, while dry/semi-moist is the worst for the cat. Wet dog food producer prices remained unchanged from December 2023 to January 2024, up 14.3% YOY, but a whopping 56.3% in January 2021 and 60% higher than in January 2019. For dry/semi- moist cat food, the January 2024 YOY figure , 5.6%, was also similar to December; prices are 32% higher than in January 2021 and 33.2% higher than January 2019.
In perhaps a bit of good news, dry/semi-moist dog food — by far the largest pet food subcategory in the US — is up just 3.2% YOY in January 2024, and 21.5% and 23.4% in January 2021 and January 2019, respectively.
Decline in the small pet food category
There is another area of good news: Producer prices for other pet food (not dog and cat food) actually fell by 7.4% YOY in January 2024, making them higher by 19.6% than in January 2021. This category seems to have more movement in terms of producer prices; its annual PPI It has declined for three straight years, from 2015 to 2017, according to Gibbons.
Since this category accounts for a small portion of the overall pet food market, such reductions do not have a significant impact. But, Gibbons sees a glimmer of hope: “The current decline in other pet food prices foreshadows a decline in dog cat food PPI?” he wondered. Now that’s really good news.
