Input Costs -0.7% w/w, +3.4% y/y. Energy Eases, Coffee Bounces & Key Grocery Perishables Deflationary. HSY+, LW+, MDLZ+, EPC-, PG-, KR-, ACI-

By Jonathan Feeney and David Schick and David Katzman and Jack Hermann Published on July 2, 2026 PDF

The Optimal Advisory Cost Factor decelerated on a y/y basis for the fifth consecutive week. It had accelerated for 15 consecutive weeks after the breakout of the Iranian conflict. For the year, costs are up slightly (+3.5% y/y) on energy and packaging, now ~15% off February lows -still a challenge to many outlooks. While down y/y, softs & sweetener bounced w/w while the inflationary energy/packaging complex eased.

Cost tailwinds to watch: Meats/Proteins -27.7%, Softs/Sweeteners down -22.4% y/y, HSY -21.9% y/y, LW –-18.4% y/y, MDLZ –6.9% y/y, Energy/Freight -2.5% w/w. See Slide 5.

Cost headwinds to watch: Packaging +19.2% y/y, Energy/Freight +12.1% y/y, EPC +16.6% y/y, PG -15.4% y/y, Softs/Sweeteners +5.1% w/w, and up +7.1% vs last month. See Slide 5.

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 key equity indices and macro indicators. See Slide 8.

Crude continues to work lower, now roughly flat y/y. WTI dropped to near $68 a barrel, still roughly 15% higher than 12mo lows seen winter 2025. Shipping traffic continues to return to pre-conflict levels, a tailwind for outlooks in HPC and staples companies broadly as supply returns to normal.

Cost Factor -0.7% w/w, +3.4% y/y (vs. prior week flat w/w & +4.0% y/y). Notable commodity moves this week include Coffee up +12.3% w/w (and up 31% m/m) while Sugar +10.6% w/w (although down 9% y/y), driven by weather-related supply concerns.

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 Input Commodity Performance by Group

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

Figure 3: Biggest Input Cost Movers y/y

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

The_Cost_Factor 07.02.2026 Download

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