Is inflation also a big issue in pet food?
As of December 21, 2021, inflation stood at 7% in the US economy, which is higher than other developed countries (and pet food markets) such as Japan (0.6%) , Australia (3%), Italy (3.9%), Canada (4.7%). %), the euro area as a whole (5%, although some countries, such as France, are much lower) and the United Kingdom (5.1%).
In some developing countries, including those with relatively established pet food markets, inflation is even higher: 7.36% in Mexico, 8.4% in Russia, 10.06% in Brazil , 36.08% in Turkey and 50.9% in Argentina, according to Trade economy.
How does pet food inflation keep up with this overall economic situation? In the United States at least, it lags the national inflation rate: just 2.4%, according to December 2021 data from the United States Bureau of Labor Statistics (BLS), compared to 7% for the United States. whole economy.
Pet food inflation is lower than human food and pet care inflation
For consumer product categories closely related to pet food, for example, human food, inflation in the United States is almost as bad as the overall national inflation rate. According to recent BLS data, which was analyzed and shared by John Gibbons, who goes through the “pet business teacher”, inflation within the “food at home” category recorded 6.5%, while “food out of home” was 6%.
In the US pet care industry, pet food ranked lowest, compared to pet supplies (3.4%), the total pet category (4.1 %), veterinary services (4.7%) and all pet services (veterinarians and non-veterinarians, 5.7%). And, while pet food inflation was higher in 2021 than in 2020, it’s no surprise: not only has the industry suffered from the same shortages and supply delays due to the pandemic, combined with increased demand, than most other sectors; but pet food also saw a deflationary scenario in 2020, down 0.7% from 2019. As a result, from 2019 (pre-pandemic) to 2021, pet food inflation fell to just 1.6%, according to Gibbons.
Pet food inflation in the United States relative to the overall economy and other sectors, according to data from the United States Bureau of Labor Statistics analyzed by John Gibbons. l Courtesy of John Gibbons
With industry experts and economists in general predicting that supply issues and shortages will continue through early 2023, it’s possible pet food inflation will pick up in 2022, but probably not. at the level of the global economy. From one perspective, human food inflation was on the rise before the pandemic, according to the International Monetary Fund, due to other disruptions like African swine fever decimating the pig herd in China, which accounted for more than 50% of all pigs globally. While a ripple effect from human food to pet food almost always seems to occur, not all global events and disruptions have the same impact on pet food.
According to an entity called the Official Data Foundation, pet food inflation increased by an average of 1.88% per year from 1997 to 2021. In comparison, human food has had an average annual inflation of 3.13%, although this dates back to 1913.
What is the world situation?
Pet food inflation could follow a similar trend globally and in the US: increase in 2021, but not at the level of the overall economy. For example, in Mexico, in August 2021, pet food inflation was 4.2%, according to Ivan Franco of Triplethree International. That was actually lower than the same period in 2020, when it hit 4.7%, and significantly lower than the 7.36% for the entire Mexican economy in December 2021.
Still, pet food inflation could have risen for the remainder of 2021, and Franco warned that inflation data, from Mexico’s National Institute of Statistics (INEGI) index, covered brands representing only around 60% of the local pet food market. “The prices of these excluded brands are likely to rise faster than the market leaders because their bargaining power throughout the supply chain is lower than that of the leaders,” he wrote. “Excluded brands are primarily regional, emerging and smaller players.”
In other developing markets with runaway inflation, such as Turkey and Argentina, pet food prices could rise at or near the same level as national economies. The COVID-19 pandemic seems destined to affect the world in myriad ways for some time to come.