General Mills Inc posted a better-than-expected 50 percent increase in quarterly profit, helped by strong sales of higher-margin products like cereal and falling commodity costs.

The company also raised its full-year earnings forecast.

General Mills, like most food companies, has benefited from cost-cutting and easing commodities costs, while its sales have been boosted as consumers eat more meals at home to save money.

The maker of Cheerios cereal, Progresso soup and Yoplait yogurt said profit rose to $565.5 million, or $1.66 a share, in the fiscal second quarter ended November 29, from $378.2 million, or $1.09 a share, a year earlier.

Excluding a gain from a change in the market price of commodity positions the company holds, earnings were $1.54 a share. Analysts on average forecast $1.45, according to Thomson Reuters I/B/E/S.

Sales rose 1.7 percent to $4.08 billion as a 4 percent increase in the U.S. retail segment, the company's largest business, helped offset a 16 percent decline in the bakeries and food service unit.

Volume rose 2 percent in the U.S. retail business at a time when some companies have seen that measure of products shipped fall amid pressure from lower-priced competitors.

Sales of Big G label cereal, which includes Fiber One, Chex and Cheerios, rose 10 percent.

Gross margin rose to 41.2 percent in the quarter from 37.1 percent a year earlier, excluding changes in the market value of commodity positions.

The company now forecasts fiscal 2010 earnings of $4.52 to $4.57 a share excluding items. In September it forecast $4.40 to $4.45.

General Mills shares closed at $68.29 on Wednesday on the New York Stock Exchange. The stock is up 12 percent this year, compared with a 20 percent increase for rival Kellogg Co .

(Reporting by Brad Dorfman; Editing by Lisa Von Ahn and John Wallace)