My colleague, Jim Kroman, recently wrote about the confusing messages we receive regarding the state of the economy and inflation rates. While we hear inflation, which is the rate of price growth, is moderating, prices are now at a much higher level than they were just 2 years ago. We are seeing a slowing of food price growth but are not seeing actual price decreases with the exception of the price of eggs which has declined due to increased supply, bouncing back after the decimation that avian influenza had on layer flocks.
One of the biggest costs of pet ownership is the cost of pet food. Pet food inflation continues to be stubbornly high with prices growing +13.8% in May 2023 vs. May 2022, a rate that is three times the rate of the Consumer Price Index growth of +4% and price increases for human food of +5.8% for the same period. The good news (?) is that the rate of growth is down from +14.6% in April.
Per the St. Louis Fed economic data, the Producer Price Index for dog and cat food manufacturing has grown +14.3% May 2023 vs. May 2022. Part of the rationale for the hefty increases centers around the average producer price increases for key inputs such as rendered meats and meat by-products, which has grown +22% during the same period of time. Some of these inflation trends have plateaued. Will prices actually decline, or will they be stuck at the higher levels for a while? As you can see, having a four-legged family member is now an even more significant financial commitment – will this impact future pet ownership?
Randy Freides
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