Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / How Your Raise Is Finally Beating Pet Care Costs
Transcript
- Lucas: If you've taken your dog to the vet lately, you probably noticed the bill went up. But here's the thing — your raise may have finally caught up. Luna: Wait, are you saying vet costs are actually going up slower than wages now? Lucas: Exactly. Let me give you the numbers. As of May 2026, average hourly earnings for private workers hit $37.50, up from $37.41 the month before. Meanwhile, the overall CPI is at 334.0, up from 332.41. So wages are still slightly ahead of inflation. Luna: Right, but pet care specifically — how does that look? Lucas: Good question. The pet care category — which includes vet services, pet food, and supplies — saw a huge spike during the pandemic. People adopted millions of dogs and cats, and demand pushed prices up fast. But now, supply has caught up, and competition among clinics and pet food brands is cooling price increases. Luna: So the pandemic pet boom is finally unwinding? Lucas: In a sense. The employment cost index for wages rose to 177.5 in the first quarter of 2026, up from 176.23. That means employers are paying more. And core CPI, which excludes food and energy, is at 336.1, up from 335.42. So the gap is narrowing. But for pet care, the annual increase is now below 3 percent, while wages are growing around 4 percent. Luna: That's a real win for pet owners. But is this just a temporary blip? Lucas: Probably not. The structural factors are shifting. More people are returning to offices, so they're spending less on dog walkers and daycare. Plus, the supply chain for pet food has stabilized after the Russia-Ukraine disruption. And there's more competition — think about how many new vet clinics opened in the last three years. Luna: So what does this mean for the average listener who owns a pet? Lucas: It means that after years of feeling like every trip to the vet ate into your budget, your raise is finally giving you some breathing room. If your income went up 4 percent and pet costs went up 2.5 percent, you're ahead in real terms. Luna: That's a nice change from previous episodes where we talked about energy or rent eating your raise. So this is a bright spot? Lucas: Exactly. And it's not just pet care — we're seeing similar trends in categories like furniture and appliances, which we've covered. But pet care is a good example because it's so emotional. People really feel that pinch when they have to pay for their furry friend. Luna: Yeah, my own cat's vet bill last year was painful. So if this trend holds, maybe I won't dread the annual checkup as much. Lucas: Right. And the data suggests it's sustainable. The 10-year breakeven inflation rate — a measure of expected inflation — dropped to 2.26 percent recently, down from 2.29. That suggests markets don't see a big reacceleration in prices. Luna: So wages can keep winning in categories where supply has adjusted. That's a good story. Lucas: Speaking of stories, if you've been finding these episodes valuable — like, if understanding where your raise is actually beating inflation has been worth something to you — there's a small way to support the show. Luna: Yeah, we keep this podcast ad-free, and listener support is what makes that possible. Lucas: Honestly, if today's episode was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. It's that simple. Luna: And it really does help us keep going. So back to pet care — what's the one thing listeners should watch for in the next few months? Lucas: Keep an eye on the core PCE price index, which the Fed watches. It was at 129.6 in April, up from 129.32. If that stays moderate, wages should continue to outpace inflation in categories like pet care. But also watch the employment cost index — if wage growth slows, that advantage could shrink. Luna: So the key is wage growth staying above 3.5 percent or so? Lucas: Roughly. As long as nominal wage growth stays above CPI inflation — which it has been — real purchasing power improves. And for pet care specifically, the supply dynamics are favorable. More vet schools are graduating doctors, more pet food brands are competing, and consumers are becoming more price-sensitive. Luna: That's actually a pretty optimistic note for a show about cost of living. Lucas: Well, we try to find the bright spots when they're real. And this one is backed by data. Luna: Alright, let's see if the trend holds in next month's numbers. Lucas: We'll be watching. For now, if you've got a pet, maybe that next vet visit won't sting quite as much.