Cost Inflation ~300 bps GM Outlook Shock, Inputs -0.1% w/w, +7.2% y/y, HSY+, LW+, Protein+, Wings+, MDLZ+, PG-, CLX-, EPC-

By Jonathan Feeney and David Schick and David Katzman and Jack Hermann Published on May 22, 2026 PDF

The Optimal Advisory Cost Factor was flat this week (+7.2% y/y). Energy & packaging increases since Iran hostilities have rapidly erased late 2025/early 2026 tailwinds – an especially thorny problem for CPG companies in categories with leaders executing tactical price reductions (e.g. PEP, GIS). On the other hand, softs, sweeteners, and proteins are providing pockets of earnings opportunity to select food & restaurant (e.g. wings, non-beef protein) buyers.

Cost tailwinds to watch: Meats/Proteins down -26.8% y/y, Softs/Sweeteners –26.6% y/y, HSY -25.4% y/y, LW –11.8% y/y, MDLZ -4.8% y/y. See Fig 1.

Cost headwinds to watch: Energy/Freight +2.7% w/w, Packaging +25.2% y/y, PG +23.3% y/y, CLX +22.1% y/y, EPC +21.1% y/y, Energy/Freight +19.5% 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 key equity indices and macro indicators. See Fig 11.

Cost Factor -0.1% w/w, +7.2% y/y (vs. prior week +0.2% w/w & +6.4% y/y). Notable commodity moves include Bunker Fuel +95% ytd; Diesel +60% ytd.

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

Figure 11: Market Sector Performance

Sources: Optimal Advisory Proprietary Analysis, Bloomberg

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