The other day, I happened to overhear a conversation between two people commiserating about the price of a large bag of dog food—a common refrain in the past year. Yet new U.S. pet food inflation data for March 2023 from the Bureau of Labor Statistics (BLS) shows a slight decline year over year (YOY) from March 2022, perhaps signaling that relief may be on the horizon. Whether it’s just the near horizon or part of a longer-term outlook remains to be seen.
Inflation for food, pet food down in March
Thanks to John Gibbons, aka the Pet Business Professor, for compiling and sharing the BLS data for pet care and its subcategories, including pet food. It shows that for the U.S. pet care category overall, inflation stood at 9.4% YOY in March, down from 10.9% in February. For pet food, the figures were 14.4% in March and 15.2% in February.
Those are welcome declines but still uncomfortably high, especially given that consumers are also still paying far higher prices for their own groceries. Labeled by BLS as “food at home,” that category had inflation of 8.4% YOY in March, down from 10.2% in February, an even bigger drop. The overall U.S. consumer price index (CPI) registered at 5% in March, down from 6%.
Yet when you consider that economists and the government consider an inflation rate of about 2% as healthy for a well-functioning economy, 5% still hits consumers hard, and that’s even more true with the rates for food and pet food.
Positive signs mixed with ongoing concerns
In relative terms, though, the March decreases are welcome news. With supply chain disruptions easing somewhat for pet food manufacturers and suppliers, perhaps the declines indicate a downward trend.
However, we’re not out of the woods yet. Signs to watch include a labor dispute playing out on the U.S. West Coast port, threatening to renew supply chain snarls, as well as issues with the global economy causing uncertainty and concerns over a potential recession, or at least a further slowdown.
And, unfortunately, U.S. pet food producer prices spiked again in March, revealing a 17.3% YOY increase, up from just 10.5% YOY in February. (Gibbons noted that this follows a pattern since 2021 of producer prices increasing in the spring.)
It’s also important to remember that the retail prices comprising inflation data lag behind supply chain, labor and economic events. So while easing of disruptions, along with economic policy, over late 2022 and early 2023 may be driving the current modest decreases in inflation, problems happening now could portend inflation rates spiking up again later in the year.
*Note: This post was updated on April 14, 2023, to replace newly available data on U.S. pet food producer price increases.