Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating the Cost of a Pet
Transcript
- Lucas: If you own a dog or a cat, you have probably felt like your furry friend is costing you more every time you walk into a pet store or the vet's office. And for the last couple of years, that feeling was backed up by the data. Pet-related inflation was running well above the overall consumer price index. Luna: Right, the whole 'petflation' thing was definitely real. I remember seeing numbers like pet spending jumping 30 percent from 2022 to 2024. Lucas: Exactly. But here's the twist we're watching right now in mid-2026: wages are finally catching up. The latest data we have, from June, shows average hourly earnings for private workers hit $37.60. That's up from $37.51 in May. Meanwhile, the core CPI, which strips out food and energy, sits at 336.1 as of May. So wage growth is now outpacing core inflation. Luna: And pet costs specifically? Are they actually coming down? Lucas: Not coming down, but the rate of increase is slowing significantly. Let's look at the Bureau of Labor Statistics data on pet spending. For 2025, the average household spent about $750 on pets, up from $700 in 2023. That's still a 7 percent increase over two years, but compare that to the 2021 to 2023 period, where pet spending surged over 20 percent. Luna: So the acceleration is over. And if your raise has been, say, 4 or 5 percent annually, you're starting to get ahead. Lucas: Exactly. The employment cost index for wages, which is a broader measure, stood at 177.5 in the first quarter of 2026, up from 176.23 the prior quarter. That's about a 2.5 percent annualized gain, but private sector wage growth is actually higher. So the typical worker's paycheck is climbing faster than the cost of kibble and vet visits. Luna: But vet care is still the big ticket item. I've heard stories of a simple teeth cleaning costing $500 or more. Lucas: Veterinary services are a different beast. That category has been running hot because of labor shortages — vet techs are hard to find, and clinics have to pay up. But even there, the rate of increase is moderating. The BLS data shows vet services inflation peaked at around 8 percent year-over-year in 2023, and it's now down to about 5 percent. Luna: Still above overall inflation, but the gap is narrowing. Lucas: Right. And if you look at pet food, that's actually seen some price decreases in certain segments. The big pet food companies — think Mars Petcare, Nestlé Purina — they've been adjusting formulations and cutting costs. So dry dog food prices are essentially flat year-over-year. Luna: So the message for pet owners is: your raise is finally beating the cost of your pet, but you have to look at the specifics. Vet care still stings, but overall, the wallet pressure is easing. Lucas: And that's a big deal, because pet ownership is incredibly widespread. Over 66 percent of U.S. households have a pet. So when pet costs were rising faster than wages, it was a real squeeze on millions of families. Now that dynamic is reversing, and it's another data point showing that the labor market is still strong enough to give workers bargaining power. Luna: Speaking of the labor market, did you see that headline about the labor force participation rate dropping to its lowest in 50 years, outside of Covid? That seems contradictory to a strong labor market. Lucas: It is a weird signal. The participation rate falling means fewer people are working or looking for work. That could be because of retirements, or people giving up. But at the same time, unemployment is still low — we don't have the exact number today, but it's been hovering around 4 percent. So employers still need to compete for workers, which keeps upward pressure on wages. Luna: And that's exactly why raises are sticking. Even if some people are leaving the labor force, those who remain have leverage. Lucas: Exactly. And that's the structural shift we've been talking about on this show for the last hundred episodes. The pandemic rearranged the labor market, and one of the lasting effects is that workers have more power to demand pay that keeps up with — or beats — inflation. Luna: So for our listeners who are pet owners, the takeaway is: check your own numbers. If your raise this year was 4 percent or more, you're likely coming out ahead on pet costs. Lucas: And if it wasn't, that's good ammunition for your next performance review. You can say, 'Look, the cost of living is still going up, and specifically, my pet costs have risen X percent. I need a raise that covers that.' Luna: I love that. Real data to back up the ask. Lucas: Alright, let's pivot a bit. We've been talking about pet costs, but there's another category that's been surprisingly resilient: the cost of staying home. There was actually a headline today about 'funflation' — the idea that staying in isn't the cost-saver it used to be. Things like streaming services, takeout, even home entertainment have gotten pricier. Luna: We've covered streaming and food delivery in previous episodes, but I think the pet angle is a fresh one. And it ties back to the broader theme: wage growth is finally beating specific cost categories, one by one. Lucas: Exactly. And that's what makes this series valuable. We're not just saying 'wages are beating inflation' in a generic sense. We're drilling into the actual things people spend money on — car insurance, rent, cellphone plans, and now pets — and showing where the data says you're winning, and where you're still losing. Luna: And speaking of winning, I think if this episode made a difference in how you think about your pet budget, that's a small win. And if it was worth, say, the price of a coffee to you, you can support the show at buy me a coffee dot com slash fexingo. Lucas: Yeah, totally. We keep this show ad-free and listener-supported, so every little bit helps us keep digging into these numbers. And honestly, knowing that people find value in it — that's what keeps us going. Luna: So back to that 'funflation' headline. It mentioned that staying home isn't the budget move it once was. Let's talk about what's driving that. Lucas: Sure. So the cost of home entertainment — think streaming services, video games, even home improvement projects — has been rising. Streaming services have been hiking prices and adding ad tiers, so the average household is spending more. The BLS data shows that the 'other entertainment services' category, which includes streaming, has risen about 6 percent year-over-year. Luna: And takeout and delivery? Those have been hit by higher labor costs and food prices. Lucas: Right. Food away from home is up about 4.5 percent annually. So if you're trying to save money by staying in and ordering in, you're not saving as much as you used to. But again, wage growth is still outpacing that, so the net effect is still positive for workers. Luna: So the overall picture is improving, but it's uneven. Pet costs are a win, home entertainment is a mixed bag, and things like rent and health insurance are still tough. Lucas: Exactly. And that's why we keep doing these episodes. The macro numbers are good — wage growth is solid, inflation is cooling. But the micro reality depends on what you actually spend money on. Our job is to help you see where you stand. Luna: And for pet owners, the news is good. So go ahead, buy that premium kibble — your raise can handle it. Lucas: Just maybe skip the gourmet dog treats for now. We'll keep an eye on those.