FILE PHOTO: Brands of cereals owned by General Mills are seen in a store in Manhattan, New York, U.S., November 11, 2021. REUTERS/Andrew Kelly/File Photo

General Mills maintained its annual sales and profit forecasts on Wednesday, as the Cheerios maker grapples with rising economic uncertainty and softer demand in key markets, including North America.

Rising consumer prices and a cooling U.S. labor market have squeezed household budgets, steering shoppers to cheaper private-label alternatives and pressuring packaged food makers across the region.

The Minneapolis-based company saw quarterly volumes in its North America segment decline 16 percentage points compared with a year earlier and now expects overall category growth to fall below its long-term targets.

General Mills reaffirmed its annual targets of adjusted profit declining 10% to 15% and organic net sales ranging from down 1% to up 1%.

Shares fell about 2% in premarket trading. The stock has dropped about 22% this year.

The company posted a smaller‑than‑expected sales decline, helped by volume gains in its North America pet food unit and in international markets including India and Europe.

Net sales in the international segment rose 6% in the quarter ended August 24, with pricing up 6 percentage points.

North America pet food net sales increased 6%, partly due to the recent acquisition of Whitebridge Pet Brands’ North America business, after a 1% decline a year earlier.

First-quarter sales fell 6.8% to $4.52 billion, compared with analysts' estimates of a 6.9% decline to $4.51 billion, according to data compiled by LSEG.

On an adjusted basis, General Mills earned 86 cents per share, beating estimates of 81 cents, driven partly by price increases in international and North America pet food segments.

(Reporting by Anuja Bharat Mistry and Sanskriti Shekhar in Bengaluru; Editing by Tasim Zahid)