(Reuters) -Cheerios maker General Mills posted a smaller-than-expected drop in quarterly sales on Wednesday, backed by higher prices for its breakfast cereals, snack bars and pet food products that helped cushion a blow from slowing demand.

Shares of the packaged food maker rose about 4% in premarket trading after the company reaffirmed its annual sales and profit targets for a third time.

The last two years have seen staple food makers, including General Mills, reap the benefits of consistent price hikes that helped shield their profit margins from spiraling raw materials, labor and supply chain costs, while seeing very little pushback from consumers.

However, sticky inflation and higher borrowing costs have now made customers more cautious with spending on expensive branded products and focus on buying cheaper private-label alternatives that are gaining more shelf space at retailers.

The Minnesota-based company had most recently maintained its forecast in February.

Its net sales dropped about 1% to $5.1 billion in the third quarter, compared with analysts' expectations of sales to drop about 3.1% to $4.97 billion, according to LSEG data.

(Reporting by Granth Vanaik in Bengaluru; Editing by Shweta Agarwal)