PepsiCo feeling pressure to raise prices

PepsiCo gave indications that price increases may be store Thursday as the food and beverage giant reported a decline in first quarter profits.

PepsiCo's net income fell to $1.14 billion, or 71 cents per share from $1.43 billion, or 89 cents per share a year earlier. The year-over-year comparison was tilted by a $958 million accounting gain in the first quarter of 2010, and company officials said the results were in line with management expectations.

Chief Financial Officer Hugh Johnston said the company is experiencing a high level of input cost inflation,

which we are addressing with productivity programs, pricing actions and hedging strategies.

Net revenue and volume were down in the Quaker Foods North America division that includes Quaker Oats. The declines were in ready-to-eat cereals, side dishes and mixes, PepsiCo reported. Operating profit benefited from a inventory accounting change that contributed 7 percentage points of growth, and from overall pricing and productivity gains.