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14 Covetrus | ph: 855.724.3461 | fx: 888.329.3861 | northamerica.covetrus.com The cost of living is headed in one direction: up Rising inflation has pushed consumer prices to their highest levels in more than 40 years. For example, the consumer price index (CPI) rose 7.9% in February 2022, its highest level since January 1982. 1 Such a drastic rise in CPI has a profound impact on pet owners and other consumers because it essentially measures the cost of living. This includes groceries, housing, transportation (including gasoline), medical care and other key goods and services. When these prices rise month after month, consumers feel the pinch—which can lead to making hard choices when it comes to spending their hard-earned dollars. With inflation running at the highest levels in generations, the Federal Reserve is stepping in with a series of interest rate hikes intended to help cool down the economy. The first quarter-percentage point increase was in March, and as many as six more rate hikes are possible this year. 2 While these moves will make an impact, it will take some time. It's safe to say that historically high inflation will be with us for the near future. What does this mean for veterinary practices and the pet owners they rely on? The impact on veterinary practices High inflation is taking a toll on businesses of every kind everywhere—and veterinarians are no exception. Case in point: vendor and lab fees for veterinary practices have risen as much as 12 percent. 3 For veterinarians, price increases like that are manageable only if they decide to implement one key strategy: increasing their prices to pet owners. At Covetrus ® , we've seen many veterinary practices increase prices an average of five percent for their products and services. This isn't about taking advantage of or "gouging" customers. This is adjusting to the reality of rising inflation. Indeed, veterinary prices have historically increased an average of 4.5% annually between 1997 and 2022. In some years, prices rose even more—such as 7.63% in 2000, 6.81% in 2001 and 6.46% in 2008. 4 So raising prices to help combat inflation in 2022 would not be without precedent. For one veterinary consultant and economist, raising prices during inflationary times is a matter of survival: "Even services companies with an altruistic nature such as animal hospitals owe it to themselves and their patients to stay financially healthy during inflationary periods. That means making a profit and protecting profit margins," said Brian Beaulieu, CEO and chief economist for ITR Economics, a U.S. firm widely regarded for its global forecasting acumen. In addition, Beaulieu formerly worked for the Overcoming inflation Rethink your pricing strategy to succeed today By Andrew McDonnell, Covetrus