Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Raises Are Beating the Cost of Pet Care
Transcript
- Lucas: So Luna, I've been digging into the latest inflation data, and there's a really interesting number hiding in there. The core CPI is running at 3.3 percent annualized, but the cost of something most of us care about deeply — our pets — is actually growing slower than that. Luna: You mean the cost of taking care of our furry friends is not going up as fast as everything else? That's a relief, because my dog's vet bills have felt like they're skyrocketing. Lucas: Right, and that's exactly what the data shows. For the past few years, we've been conditioned to think that everything is getting more expensive, and while that's true on average, the pet care category has been a notable exception. Looking at the July numbers, the overall CPI is up about 3.2 percent year-over-year, but pet care services have risen just over two percent. Lucas: And here's the thing — average hourly earnings are up 3.1 percent, so your paycheck is actually keeping pace with inflation and beating the cost of pet care. That means in real terms, taking care of your pets is getting relatively cheaper. Luna: That's a great point. So this episode is basically about how your raise is finally beating the cost of pet care. Before we dive deeper, I have to mention something, because it's what keeps this show going. A small group of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that literally funds how we're able to produce so many episodes like this. Lucas: Yeah, it's true. We don't run ads, and it's the support of those listeners that keeps this podcast ad-free and independent. So if you find value in our breakdowns, that's the way to support us. Now, back to the pet economy. Lucas: Let's look at the actual numbers. The average hourly earnings now stand at thirty-seven dollars and sixty cents. That's up from about thirty-six fifty a year ago. Meanwhile, the price index for pet care services, which includes vet visits, grooming, and boarding, has only gone up about two and a half percent. Luna: So that means our purchasing power for pet care is actually increasing. That's a nice change from hearing that everything is getting more expensive. Lucas: Exactly. And this isn't just a one-month blip. If we look at the longer trend, since the pandemic, pet care costs have risen, but they've lagged behind overall inflation. The employment cost index for wages is up about 6.3 percent over the past two years, while pet care services are up around 5 percent. So wages are ahead. Luna: But why is that? Why would pet care costs be rising slower than, say, rent or food? Lucas: Part of it is that the pet care industry hasn't faced the same supply chain shocks that hit other sectors. Also, there's been a lot of competition in the market. With more vet clinics and pet service providers opening up, prices have stayed more contained. Plus, technology has helped streamline things, from online booking to telemedicine for pets. Luna: I've even seen some pet insurance companies offering stable premiums because they've been able to manage their costs better. That's something to consider. Lucas: Right. The average cost of pet insurance has actually gone up less than two percent annually, which is pretty remarkable. And with wages rising, that means pet insurance is becoming more affordable in real terms. Luna: So if someone is thinking about getting a pet, or has one already, this is good news. But does this trend apply to all aspects of pet care, or are there outliers? Lucas: There are some exceptions. For example, the cost of pet food has risen a bit faster, closer to 3 percent, because of grain prices. And if you have an exotic pet, the costs might be different. But overall, the core services are lagging. Luna: I wonder if this is something that could shift. If the labor market tightens and vets demand higher wages, we might see those costs catch up. Lucas: That's a real possibility. The labor market is still pretty strong, and if vet techs and groomers see their wages rise, that could push prices up. But for now, the data shows that your raise is beating the cost of pet care. Luna: That's a relief, because I know a lot of our listeners are pet owners and they worry about these costs. It's nice to have a positive story for once. Lucas: And it's not just about the cost. The fact that wages are outpacing pet care costs means households have more discretionary income to spend on other things, which is good for the economy overall. Luna: So, Lucas, beyond the immediate relief, what does this tell us about the broader economic picture? Lucas: It's a sign that the inflation we're seeing is not uniform. Some sectors are still under pressure, but others are moderating. The Fed's preferred inflation gauge, the core PCE, is also showing a slowdown. So this gives policymakers some room, potentially. Luna: Could this be a leading indicator that other services will start to see slower price increases? Lucas: Possibly. Pet care is a discretionary service, so when consumers feel stretched, they might cut back, forcing providers to keep prices competitive. That could spill over to other areas like dining out or entertainment. Luna: Interesting. So maybe the pet care story is actually a window into the broader inflation dynamics. Lucas: Exactly. And for the average listener, the takeaway is simple: your paycheck is going further when it comes to taking care of your pets. That's a tangible improvement in your cost of living. Luna: I'm definitely going to mention this to my dog's vet next time I'm there. Maybe they'll give me a discount. Lucas: Probably not, but you can at least feel better about the bill. And remember, this is a trend that could change, so keep an eye on those wage numbers and pet care prices. Luna: So what's the one thing you want our listeners to remember from this episode? Lucas: That your raise is finally beating the cost of pet care. It's a small victory, but it's a victory nonetheless. And it's a reminder that inflation isn't hitting everything equally. Luna: Well said. Thanks for joining us on this episode of Wages and Prices. We'll see you next time.