For several years, the pet food industry has celebrated the market’s growth outpacing that of many other consumer goods categories, even during the pandemic. Yet no one is high-fiving over pet food’s latest growth story: an inflation rate that’s exceeded even the overall U.S. Consumer Price Index (CPI).
Pet food inflation in the U.S. rose to 10.3% in June 2022 versus June 2021, surpassing the 9.1% CPI increase. While year-to-date (YTD) through June, pet food inflation was at 6.5%, lagging the CPI’s 8.3%, pet food appears to be catching up as the year goes on, according to data shared and analyzed by John Gibbons on his PetBusinessProfessor.com blog.
For comparison, “food at home” (human food) inflation increased to 12.2% in June 2022 and YTD through June was up 10.2%. Expanding the review period from 2019 to 2022 YTD, Gibbons showed pet food at 7.6%, compared to 13.3% for the CPI and 15.8% for food at home.
The reasons for the soaring inflation, for pet food and every other category, are myriad: the pandemic, supply chain disruptions, the Russian invasion of Ukraine, to name some of the main culprits. Plus, U.S. government policies on renewable fuels, which incentivize or mandate the use of common crops and foodstuffs to make biofuel, impact pet food since it uses so many ingredients or by-products from the human food stream.
Ingredients are just one area where pet food producers face increasing costs; labor, packaging materials, transportation, shipping containers, fuel and others also play a role. These are all reflected in the rising Producer Price Index (PPI) for pet food, which is starting to drive increases in retail prices. After increasing a little but then stabilizing in 2021, the dog and cat food PPI grew again in January/February 2022, at 9.6%, then spiked 12.7% in May. (It decreased slightly from that in June.)
Gibbons provided a comparison between the pet food CPI and dog/cat food PPI: “The retail inflation rate for pet food is now 66% of the PPI increase for dog and cat food. In February 2022, it was 31.6% and only 25.4% back in December 2021.” The gap is definitely narrowing, and with many industry experts and observers expecting supply chain disruptions and cost increases lingering into 2023, it is highly likely those will continue to affect retail pet food prices.
Pet food producer price index’s link to retail inflation
