Inputs Near 12m Lows Bring 2026 Margin Cushion, Comp Headwind, Cost Factor Lower, -2.9% w/w, -7.5% y/y. Friday Cost Factor

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

Optimal Advisory Cost Factor – All measured Tickers and Industry Indices down w/w. After a blip higher last week, another steep w/w decline in energy costs as 24/32 measured commodities overall flat/down w/w.

Cost Factor -2.9% w/w, -7.5% y/y (vs. prior week -1.7% w/w & -4.1% y/y). Tailwinds in energy input costs continue this week while a continued fall in egg prices continue to support lower protein costs. Many of our measured company and industry cost factor exposures at 12-month lows. See Figs 1-8.

Beyond energy, broad-based commodity price declines have pushed many measured indices to 12-month lows. 6/15 Food Sector companies at their lowest cost factor exposure levels in the past 12 months. Meanwhile 5/6 restaurant industries measured also at their 12-month lows (notable exception is Fast Food Burger Restaurants as cattle remains up +20.0% y/y). See Figs 5-8. We also note lower commodity prices extended to input costs not measured in our analysis; oil prices down -22.7% y/y. See Fig 11.

Cost tailwinds to watch: Energy/Freight -9.2% w/w, Meats/Proteins down -31.2% y/y, HSY -27.9% y/y, MDLZ -17.4% y/y, wing restaurants -15.1% y/y. See Fig 1.

Commodity Inflections to watch. Eggs continue to be one of the largest cost tailwinds for staples companies this year. Eggs now running down -56.5% m/m and beginning to lap the avian flu outbreak from late ‘24 / early ‘ 25 (down -85.3% y/y). Natural Gas prices peaked in early December 2025, but are now -31.0% m/m, up just +8.9% y/y. Significant easing in a leading cost headwind story of 2025. See Fig 4.

Cost headwinds to watch: Packaging (+1.6% w/w, +3.8% y/y), CPB (+2.8% y/y), CELH (+2.6% y/y). See Fig 1.

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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