The impact of inflation on pets, owners and businesses

Talk about pampered pets. Even with sky-high inflation and other economic pressures, plus the rising cost of pet food, services, and accessories, people are spending more money than ever on their pets. Why? It may be due to the COVID-19 pandemic pet boom, the fact that people are spending more time at home shopping online than traveling and going out, or other factors. Whatever the case, pets are sitting pretty right now.

While Americans may be cutting costs elsewhere to make up for soaring gas and food prices, pets aren’t feeling the pinch. It doesn’t look like they will be anytime soon either.

Inflation has been soaring over the past year, climbing to the highest rates since 1981. The Consumer Price Index (CPI), which measures the average price U.S. consumers pay for a variety of goods and services, rose 8.3% in the last year, from April 2021 to April 2022.

While pets and pet products are included in the CPI, when broken down separately, they’ve fared a bit better, rising only 7.2% during the same period. That’s significant but still more than a percentage point lower than the overall CPI. Also, the rate of inflation for pet food (7%) was less than the rate for food in general (9.4%) for the same period.

Source: Bureau of Labor Statistics

Another indicator of annual inflation, the Personal Consumption Expenditures (PCE) index, has been rising as well. It climbed 6.6% between March 2021 and March 2022.

The bottom line, according to these key indicators, is that there isn’t likely to be much promising news for pet owners’ pocketbooks anytime soon. These rising rates affect nearly every aspect of pet ownership too, from supplies and accessories to vet care and beyond.

Clouds on the horizon for pet spending? Not really.

Are pet owners worried? Yes, according to a survey by Rover in which 73% said they are concerned about the rising costs of pet ownership. Yet, pets are still getting pampered. In 2020, spending on pet toys, hobbies, and playground equipment went up nearly five percentage points compared to 2019, according to the Consumer Expenditure Survey.

Pet supplies and accessories range from the necessary must-haves to the fun and hard-to-resist, things like toys, pet beds, leashes, and collars. No matter their function, the price for these items has been rising steadily this year.

Pet supplies outpaced other household spending categories like alcohol, clothing, and baby items for the first quarter of 2022, according to Jungle Scout. Of those surveyed, 18% said they’re buying more pet supplies than the previous quarter, while only 11% said they’re buying less. A report from the American Pet Products Association (APPA) shows a majority of pet owners are still willing to pay more for ethically sourced and eco-friendly pet products, too.

The good news is most pet supplies and accessories aren’t high-ticket items, nor are they always necessities. For example, the average dog owner spent $56 on toys in 2020-2021, and the average cat owner spent $41, according to the APPA. The cost for supplies and accessories does add up though, and the sum is increasing steadily with inflation.

While that gold-studded collar for Fluffy or the 30th new toy for Fido this year may not be necessities, pet health care is a must — and a pricey one at that. The APPA says dog owners spent $458 on surgical vet visits and $242 on routine veterinary care between 2020 and 2021. Cat owners spent $201 on surgical vet visits and $178 on routine ones. Add in inflation, and that care is likely growing even more costly for customers.

No matter the price, though, if you have a pet, medical care is vital to their health and happiness. It’s part of the pet parenthood package and not an area in which you can skimp.

Pet services spending

Beyond veterinarian care, there are other pet services many people need, such as grooming, boarding, training, and pet sitting. Those costs have been rising over the years, even before this recent spike in inflation. According to the U.S. Census Bureau, between 2007 and 2017, sales of pet care services doubled to $5.8 billion.

With more people having more pets, the veterinary medicine market is expanding rapidly. Estimated at more than $28 million in 2019, the market is expected to grow to nearly $43 million by 2027. Inflation is hitting vets hard though.

“To do our jobs, we veterinarians purchase vaccinations, medications, medical equipment, and supplies, and each year, the cost of goods increases,” says betterpet veterinarian Dr. Erica Irish. “While low-cost clinics and shelters often receive donations and government funding, private clinics do not, so our prices tend to increase with the trends, which can be frustrating.”

According to the American Animal Hospital Association, inflation has caused steep increases in lab and vendor fees, sometimes up to 12%. Vets also need to pay employees more to provide quality care, which is also upping the costs of veterinary care. Ultimately, those costs will be passed on to pet owners when they need emergency care or routine veterinary visits.

While supply chain challenges are causing shortages in products such as pet food, overall, pet retailers are reaping the rewards of the increased spending. For example, Petco saw an 18% net revenue growth in the 2021 fiscal year. Investment bank and financial services company Morgan Stanley predicts the pet industry will nearly triple by 2030, reaching $275 billion.

Other pet businesses

While other pet businesses like groomers and boarders took a hit during the beginning of the COVID-19 pandemic when more restrictions were in place, they’re now rebounding. Even with many lockdowns in place, according to a report from the APPA, the number of people who used doggy daycares grew from 22% to 28% between 2020 and 2021.