PepsiCo sounds alarm on growing cost pressures that could hit shoppers 

Grocery shoppers hoping food prices would finally stabilize may not be out of the woods just yet. One of the world’s largest food and beverage companies is warning that cost pressures are building, raising concerns that consumers could soon feel the impact at checkout. 

Expected price increases

PepsiCo is warning that shoppers could face renewed pricing pressure later this year as the food and beverage giant grapples with rising commodity, packaging and transportation costs despite posting stronger-than-expected quarterly results.

The company reported second-quarter revenue of $24.18 billion and adjusted earnings of $2.20 per share, both ahead of Wall Street expectations. However, executives cautioned that higher input costs are expected during the second half of 2026, creating fresh challenges for the maker of Lay’s, Doritos, Gatorade and Pepsi beverages. 

Consumers remain under pressure

PepsiCo said North American food sales declined about 2% during the quarter as consumers continued to tighten their budgets. Earlier this year, the company cut prices on some of its best-known snack brands by as much as 15% in an effort to attract shoppers who had shifted toward lower-cost alternatives and private-label products. 

Despite those price reductions, executives said inflation and higher fuel costs continue to weigh on consumer spending, particularly on impulse purchases made at convenience stores and gas stations. Beverage volumes in North America also declined during the quarter. 

Costs expected to climb

Chief Financial Officer Steve Schmitt said PepsiCo expects commodity inflation, along with higher packaging and logistics expenses, to increase in the second half of the year. The company believes productivity improvements and tariff refunds may help offset part of those higher costs, but it still expects inflationary pressures to persist. 

Investors reacted cautiously to the outlook, sending PepsiCo shares lower after the earnings release as concerns grew that higher costs and cautious consumer spending could continue to pressure the company’s largest market. 

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