Proof.
By Categories, Lemma 4.35.15 we see that a fibre product in \mathcal{X} is any commutative square lying over a fibre product diagram in (\mathit{Sch}/S)_{fppf}. Similarly for \mathcal{Y}. Hence (1) is clear.
Let x \to x' be the equalizer of two morphisms a, b : x' \to x'' in \mathcal{X}. We will show that f(x) \to f(x') is the equalizer of f(a) and f(b). Let y \to f(x) be a morphism of \mathcal{Y} equalizing f(a) and f(b). Say x, x', x'' lie over the schemes U, U', U'' and y lies over V. Denote h : V \to U' the image of y \to f(x) in the category of schemes. The morphism y \to f(x) is isomorphic to f(h^*x') \to f(x') by the axioms of fibred categories. Hence, as f is faithful, we see that h^*x' \to x' equalizes a and b. Thus we obtain a unique morphism h^*x' \to x whose image y = f(h^*x') \to f(x) is the desired morphism in \mathcal{Y}.
\square
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