Veterinary prices reflect service inflation
CHRISTOPHER RUGABER Associated Press
WASHINGTON — Most pets hate going to the vet. Now it also becomes much more unpleasant for their owners.
The worst bout of inflation in the United States in four decades has inflated the cost of visiting your dog or cat with the animal doctor. Prices for veterinary services have jumped 10% in the past year, government data shows – the biggest such spike in two decades.
Soaring costs for veterinary services illustrate how high inflation has spread far beyond physical goods, such as cars, which have become scarce as the economy accelerated after the pandemic recession, to many services of which pet care is an example. This trend has fueled fears that inflation is taking root and that the Federal Reserve feels compelled to keep raising interest rates with an ever-increasing risk of triggering a recession.
From dental care and apartment rents to car repairs and hotel rates, prices for services keep rising. Such inflation is particularly difficult to control, as it is primarily driven by a tight labor market and consumer demand, which is unlikely to slow unless the economy slows significantly or slips into a recession.
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The cost of housing is the main driver of rising service prices. But even excluding rents, service prices rose 7.4% in August from a year ago.
Fed rate hikes, which affect consumer and business loans, are not ideal for controlling services inflation. And in today’s economy, the service sector accounts for the bulk of consumer spending.
“It takes more to move service prices,” said Joseph Gagnon, a former Fed official who is a fellow at the Peterson Institute for International Economics. “The real question is: what level of unemployment will it take to calm all this pressure?
Even as services become more expensive, inflation in goods is slowing. Excluding volatile food and energy, the rise in goods prices eased from an annual rate of 12.4% in February to 7% in August. On the other hand, inflation for services has continued to rise, at an annual rate of 6.1% against only 2.7% a year ago.
Soaring services prices are a key reason Fed officials have underscored their determination to keep raising rates to bring inflation back toward their 2% target, even as concerns grow over the fact that they will go too far and derail the economy.
Speaking last week, John Williams, president of the Federal Reserve Bank of New York, likened inflation to the layers of an onion, with goods representing the outer layers that are peeled first and prices of services the layer. stickier underlying.
“Therein lies our biggest challenge,” Williams said. “Prices for services have increased at a rapid pace. …And labor shortages are everywhere, leading to higher labor costs.
Like many services, veterinary care is labor intensive; worker compensation is about half the cost of running a practice. With wages rising nationwide at the fastest rate in decades, many clinic owners have had to pay more to find or keep employees. These wage increases have generally been passed on to pet owners in the form of higher prices.
Other veterinary costs, including for medical supplies, lab testing fees and advanced pharmaceuticals, also accelerated.
The industry has also been transformed by corporate purchases of veterinary clinics and hospitals – a trend some independent vets blame for driving up prices. The Federal Trade Commission responded by forcing some major chains to cut acquisitions after finding they were a threat to competition.
Like many industries, veterinary care went through heartbreaking changes after the pandemic hit in 2020, due to increased demand from pet owners and a change in the way they do business.
Alexandra Kintz-Konegger, owner of K.Vet Animal Care outside of Pittsburgh, said the combination of more visits and the need to implement new protocols was overwhelming her staff. It quickly lost eight employees, about a quarter of its workers.
“We were literally working tirelessly…simply because the demand for our services had definitely increased and we were less efficient,” she said.
Nationally, traffic to veterinary clinics increased 4.5% in 2020 and another 6.5% in 2021, according to VetSuccess, a data analytics firm.
Yet, at the same time, a survey by the American Veterinary Medical Association found that the number of pets veterinarians treated per hour fell by 25% in 2020. Such a drop in efficiency, combined with a increased demand, has left veterinarians and their staff exhausted. . Many left the field for other jobs.
Kintz-Konegger raised salaries 25% to 30% from pre-pandemic levels, which first helped it replace many of the staff it lost, only to see more departures . She would like to hire another five technicians and assistants.
Government data shows hourly wages in the veterinary industry jumped 7% in August from a year earlier, well above the 5% average for all workers. Measured year-over-year, wages jumped 14.2% in January, the biggest jump on record since 2007.
The cost of surgical supplies, medications and lab tests also continues to rise. Kintz-Konegger said his fees for blood tests and other lab work rose 8% in January and August.
It passes those costs on to consumers and has increased its fee for a basic wellness exam by 10% to $62. It also increased the prices for sick and emergency visits.
“I feel very cramped in the cost of services, the cost of staff, the cost of supplies,” she said. ”