Inputs Jump +1.5 w/w, +13.7% y/y on Energy; Grains Bounce on Supply Fears. LW+, Wing Restaurants+, EPC-, Grocers-. Optimal Cost Factor

By Jonathan Feeney and David Schick and David Katzman and Jack Hermann Published on August 28, 2026 PDF

The Optimal Advisory Cost Factor accelerated on y/y basis for the eighth week in a row. For the year, costs are up (+13.7% y/y) with a sharp change in trend since early July (+3.5% y/y) thats a huge incremental pressure on H2 2026 CPG estimates. Meats/proteins and dairy are deflationary pockets of relief for select CPG and restaurants but spell more comp trouble for grocery retailers.

Cost tailwinds to watch: Meas/Proteins -4.8% m/m and down -26.0% y/y, Dairy -9.2% y/y, LW -7.7% y/y, HSY -4.9% y/y. See Fig 1.

Cost headwinds to watch: Energy/freight +33.7% y/y, Packaging +19.4% y/y, EPC +28.1% y/y, CHD -27.2% y/y. See Fig 1.

Higher energy costs & shipping risk are implicitly an immediate tax on everything. Within COGS, they drive the cost of packaging (esp. aluminum), inbound & outbound freight as well as farm level costs (diesel, fertilizer) that are key to plantings, supply & future food inputs. Within SG&A, they drive delivery costs. They also threaten revenue with more consumer budget constraints. We monitor weekly performance of related equity indices and macro indicators. See Fig 11.

Cost Factor +1.5% w/w, +13.7% y/y (vs. prior week +2.0 w/w & +11.7% y/y). Notable commodity moves this week include Sugar up 25% m/m, corn & wheat up 12% and 13% m/m respectively off reports of tighter supply conditions and softer harvesting forecasts. We also note hog prices down -18% m/m. The energy complex including diesel up +62% ytd & bunker fuel up +82% ytd remains the dominant driver.

In this weekly note, we identify spot input costs’ putative impact on the U.S. fast moving consumer goods (FMCG) value chain, most measurably impacting staples, staples retailers, restaurants & food service. Optimal’s proprietary cost factor weights ticker & sector specific cost trends using a proprietary formula based on 32 trackable spot cost inputs – 23 of which are updated as of last night, the other 9 are latest available.

Figure 1: Weekly Cost Factor Summary

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 2: Weekly Cost Factor Margin Context

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 3: Weekly Input Commodity Performance by Group

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 4: Biggest Input Cost Movers y/y

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 5: Food Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 6: Beverage Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 7: HPC Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 8: Restaurant Level Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 9: Restaurant Employment Cost Index

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 10: Staples Sector Theme Box

Sources: Optimal Advisory Proprietary Analysis, Bloomberg

Figure 11: Market Sector Performance

Sources: Optimal Advisory Proprietary Analysis, Bloomberg

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