Sky-high inflation: pet supplies taking the hit

While some predictions forecast a general softening of inflation, the pet category seems to be an exception to the rule. In the UK, Germany, the Netherlands and Finland, the prices of pet supplies – especially pet food – have continued to show a general upward trend this year. In the US and Australia, inflation is slowing down.

Paying more than a year ago

In the first 6 months of 2023, British pet owners paid an average of 13.9% more for pet supplies than in the same period of 2022. In the US, average inflation for pet supplies in this period was 10.6%.

US inflation in the category has been declining in recent months – with an annual rate of 9% in June. But the category is still suffering in the UK, with consumers paying 14.5% more that month than they did in June 2022.

Prices for pet supplies are considerably higher than the overall Consumer Price Index (CPI) in both English-speaking nations. As of June, general consumer prices in the UK rose by 7.9% in the space of a year, while in the US the rate was considerably lower, at 3%.

Peaks in price rises

In April 2023, annual inflation had the highest impact on the UK pet category so far, at 15.4%. The biggest inflation hike in the US happened in February, when pet owners paid 15.3% more for pet supplies.

The UK’s Office for National Statistics (ONS) warns that this is not a phenomenon that only recently started. Rapid price increases have been seen since the second half of 2021. “From then on, the 12-month rate has gradually risen to what we are seeing now. That’s because the pace at which prices for pet-related goods and services, in general, have been rising during this period continues to increase,” an ONS spokesperson tells Pets International.

Pet food

August 2022 saw the highest inflation in pet food in the US in 15 years. This was 6 months after the start of the war in Ukraine. The average price of the country’s pet food increased by 14% in the second half of 2022.

In January and February 2023, inflation grew further in the US pet food market – to more than 15% – but the rate has now slightly declined. In June 2023, pet food cost 12.1% more than the previous year.

Price increases in the category are also highlighted by pet food manufacturer reporting. Nestlé’s pet portfolio, for example, felt the greatest impact of inflation across all its businesses in the first 6 months of 2023, putting its prices up by 12.1%. This is higher than its milk (11.3%) and water (10.5%) products.

From an international perspective

This inflationary environment affecting pet supplies is also the new reality in other countries, particularly in Northern Europe.

Pet products in Germany were 15.8% more expensive in June 2023 than a year before, according to the Federal Statistical Office (Destatis). The country’s pet supply prices had increased considerably at the beginning of this year, with German pet owners paying 19.1% more in March, but this went down slightly after that.

In the Netherlands, the price of pet supplies has risen by an average of 14% this year. In June alone, the inflation rate in the category was as much as 14.9%.

In the Nordic region, Finland has been critically affected by pet inflation in 2023. In June, owners were paying 17.6% more for pet products and 18.5% more for pet food. March was the month with the highest inflation rate. According to Statistics Finland, the price of pet products increased by 20.1% compared to the same month in 2022. Pet food saw a 21% increase, the highest recorded this year so far.

In the first 3 months of 2023, the price of pet products in Australia increased by 2.4%. But according to the Australian Bureau of Statistics, price rises in the category were very slight (0.1%) in the second quarter of the year.

Forecasts for the near future

Although there are no specific predictions for pet supplies, insiders agree that the general inflationary trend will decrease in the coming months and into 2024.

The Bank of England expects prices to “fall quickly” this year and believes that inflation will be at 2% by late 2024.

Euromonitor International acknowledges that the global outlook has “improved slightly” but warns that there is an element of uncertainty, as there is a “multitude of risks and headwinds, elevating the likelihood of a downside scenario”. The market research firm predicts that overall CPI will fall from 6.9% this year to 4.3% in 2024. According to their figures, the Eurozone (2.7%), the US (2.5%) and China (2.3%) should register lower inflation than average.

Black Sea grain deal

Russia’s recent decision to terminate the safe grain corridor from Ukrainian ports is unlikely to help soften the prices of raw materials used by pet food manufacturers. As the Black Sea is no longer possible, other routes such as road, rail or river are being used as an alternative means of transport.

The Danube River has become one of the preferred options to export grain to European countries. But there are some logistical restrictions. The fact that ships using the river are much smaller, for example, is reducing the amount of pet food ingredients that can be transported.

According to experts, this is likely to impact pricing in the near future. What’s more, Ukraine’s capacity to export grain has been reduced by nearly half since the termination of the Black Sea grain deal.