Input Costs +2.1 w/w, +3.6% y/y with Renewed Conflict; Cocoa & Coffee Surge. Key Perishable Deflation Threatens Grocery Comp. LW+, Wing Restaurants+, EPC-, CPB-, KR-

By Jonathan Feeney and David Schick and David Katzman and Jack Hermann Published on July 10, 2026 PDF

The Optimal Advisory Cost Factor accelerated on a y/y basis this week after decelerating for 5 consecutive weeks. For the year, costs are only up slightly (+3.6% y/y) on energy and packaging, but still up sharply (~15%) from February lows – a challenge to many outlooks presented at that time. Softs & sweeteners bounced w/w – albeit down sharply y/y — while inflationary energy/packaging inputs jumped once again.

Cost tailwinds to watch: Meats/Proteins -27.3%, Softs/Sweeteners down -17.0% y/y, LW -19.6.4% y/y. See Fig 1.

Cost headwinds to watch: Packaging +15.2% y/y, Energy/Freight +13.0% y/y, EPC +15.4% y/y, CPB +13.9% y/y, Softs/Sweeteners +12.9% w/w, and up +9.3% vs last month. 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.

Crude moves back higher this week as US & Iran trade strikes, disrupting ceasefire. WTI again topped $70 a barrel, now up roughly 9% y/y, but down from +$100/barrel seen at the peak of the conflict. Shipping traffic and oil volumes are likely to be disrupted again — halting a potential tailwind for outlooks in HPC and staples companies broadly.

Cost Factor +2.1% w/w, +3.6% y/y (vs. prior week flat -0.7 w/w & +3.4% y/y). Notable commodity moves this week include Coffee up another +10.1% w/w (and up 40% m/m) while Cocoa surges +26% w/w (now up 70% m/m), driven by weather-related supply concerns in West Africa.

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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