Pet food producers cost more for wet pet food than others

The costs of US pet food producers to make canned dog and cat food have increased the most since December 2019, before the pandemic: by 38.8% for wet dog food and 25.4% for wet cat food through August 2022. Despite a significant increase in wet dog food, It is possible that the increasing costs of wet foods for cats have played an even greater role in raising the entire cat food category.

This data comes from the most recent Producer Price Index (PPI), compiled, like the well-known Consumer Price Index (CPI), by the US Bureau of Labor Statistics. John Gibbons, accompanied by a professor of pet business, analyzed the latest pet food PPI numbers through August 2022.

Pet food PPI increasingly influences CPI

Overall, dog and cat food costs have increased by 19.3% since December 2019, with an almost constant increase (minus a few small bowls) since July 2021. “Other” pet food costs (for pets other than dogs and cats) have risen 33.7% since December 2019, after an early increase began in November 2020. While other pet foods make up a very small share of the US pet food market, the fact that their costs continue to rise at a higher rate means they are starting to contribute more to the market, Gibbons said. The PPI is for pet food in general.

It usually takes some time for PPI increases to affect retail prices, which is reflected in the CPI. However, the accelerating PPI for pet food is undoubtedly affecting the pet food CPI, which also continues to rise, reaching a record 13.1% y/y in August 2022. Gibbons has tracked the ratio between Consumer Pet Food and PPI: In December 2021, just nine months ago, it was 25.4% and had increased to 31.6% in February 2022. As of August 2022, it was 67%. In other words, he wrote, “pet food retail inflation is now 67% of the PPI increase for dog and cat food,” more than double what it was just six months ago.

Reducing the flexibility of the pet food market and pet owners?

Digging deeper into pet food subcategories, the overall dog PPI is up 21.7% since December 2019; For all cat foods, the increase is 19.7%. In contrast to wet avalanches (again, 38.8% for canned dog food, 25.4% for canned cat food), dry/semi-moist pet food costs were slightly better with both types: 15.5% for dogs and 10.6% for cats.

This is probably a little consolation for those of you reading this who still encounter rising costs for many pet food ingredients, from ingredients to packaging materials to labor to shipping costs, you name it. The bottom line is that the inevitable need to eventually pass these higher costs on to pet owners is probably doing more harm than good, as more and more are forced to cut back on pet food spending.

According to a June 2022 American Pet Products Association survey, a higher percentage of pet owners of different age groups plan to spend less on pet food due to financial concerns and restrictions. However, 68% of survey respondents said they would continue to buy the same pet food – perhaps another sign of the pet food market’s resilience. Does it have a limit?

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