Freshness indicating labels embedded with pH-sensitive anthocyanins are one type of smart packaging technology. However, the application of freshness indicating labels is mainly restricted by the high cost and hydrophilicity of the labels. In order to reduce the manufacturing cost, passion fruit (Passiflora edulis) peel powder rich in dietary fibers and anthocyanins was used to prepare freshness indicating labels in this study. Moreover, the prepared labels were further soaked in 0.01, 0.05 and 0.1 mol/L of stearic acid ethanol solution to increase the hydrophobicity of the labels. Structural characterization results showed the surface of the labels was covered by self-assembled stearic acid crystals. Stearic acid treatment significantly decreased the moisture content (16.90%→10.92%), hydrophilicity (water contact angle of 40.36°→103.01°), water vapor permeability (18.68 × 10−11 g m−1 s−1 Pa−1 → 8.10 × 10−11 g m−1 s−1 Pa−1) and water uptake ability of the labels, which effectively prevented the leak of anthocyanins from the labels. In addition, stearic acid treatment greatly elevated the inner compactness of the films, resulting in improved tensile strength (3.12 MPa→6.18 MPa) and thermal stability. Moreover, stearic acid treatment well maintained the pH-dependent color changeable ability of the labels. The labels changed from reddish brown to olive and brown in the application of shrimp freshness indicating. When the labels were buried in natural soil at 20 °C for 10 days, 82.74%−98.83% of the labels could be degraded. Therefore, this study provides a new and facile way to prepare freshness indicating labels.