Inflation at the grocery store has been hitting consumers' wallets hard since last year. While 2020 and 2021 saw minimal gains in food-at-home prices, according to the U.S. Department of Agriculture, prices soared 11.4% in 2022. Inflation has slowed this year, but food-at-home prices (grocery store and supermarket buys) still jumped 5.8% in May.

In this type of environment, pricing power is everything. A packaged food company that's unable to push prices higher to offset rising costs without suffering a steep decline in volumes is going to have trouble maintaining its margins.

(NASDAQ: PEP) put its own pricing power on display in its second-quarter report on Thursday. Organic revenue and adjusted earnings per share soared by double-digit percentages, a strong indication that despite higher prices, consumers are not abandoning the company's brands. In the weird economic environment we find ourselves in, defined by elevated inflation, rising interest rates, and a recession that's perpetually just around the corner, PepsiCo stock looks like a safe bet.

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Source Fool.com