U.S. retail price data for April 2023 showed pet food prices were 14.6% higher year over year (YOY) compared to April 2022. This represented just a slight increase over March 2023’s 14.4% pet food inflation yet was still nearly three times the U.S. national inflation rate—as shown by the consumer price index (CPI)—of 4.9% YOY. So the pet food figure is definitely a good news/bad news story: good that it seems to have steadied but bad that it’s still so painfully high.
John Gibbons, aka the Pet Business Professor, compiled and analyzed retail and producer price data from the U.S. Bureau of Labor Statistics. For pet care overall, inflation in April came in at 10.4% YOY, more than twice as high as the CPI and a full percentage point over March’s 9.4% YOY. Besides pet food, veterinary services continue to drive inflation in the overall pet care sector.
Focusing on the good news part of the pet food inflation number, the pet food producer price index (PPI), or what you as pet food manufacturers are paying for ingredients, packaging, other supplies and functions, was 13.3% YOY for April 2023 vs. 2022. This reflected a downward trend, as the PPI for March 2023 was recently revised to 13.5% YOY, after originally being pegged at 17.3%. (Gibbons explained that each month’s data are not finalized until up to four months after their initial release.)
That 17.3% PPI had been rather alarming, because such price increases for producers are usually a leading indicator for where retail prices are headed. Instead, the actual figure for March of 13.5%, followed by April’s 13.3%, may indicate that retail pet food prices will continue to hold steady or perhaps decline even more from their high of more than 15% at the end of 2022 and beginning of 2023.
In another positive sign, prices for “food at home” in the U.S. (essentially, human food groceries) also continue to decline. This category came in at 7.1% YOY in April, down from 8.4% in March and 10.2% in February.
While it’s frustrating that pet food inflation is still twice as high as for human food, the ongoing decline in prices in the latter category may also provide a leading indicator of pet food prices eventually falling to a more manageable level, as pet food and human food source many of the same ingredients and share many of the same trends and consumer demands.