That’s not exactly surprising considering food inflation saw its largest annual increase in March since 1981—rising at 8.8% year over year—but things may get even worse.

Bank of America analysts, led by Alexander Lin, said in a note on Thursday that they expect U.S. food inflation to hit 9% by the end of 2022.

Rising prices for staples like bread, milk, and meat should continue this year as the price shock from the Russia-Ukraine conflict hits American grocery stores.

“Looking ahead, we think that consumers will continue to feel the pinch of elevated food inflation,” the analysts wrote. “While there has been a lot of attention on the shock from the Russia-Ukraine conflict, we believe that it is too early to see the impact at the grocery store…rather, it should lead to sustained price increases later this year.”

Rising costs for farmers mean higher prices at the grocery store

Bank of America’s analysts noted that farmers have been grappling with rising costs like never before. The cost of agricultural chemicals, including fertilizers and pesticides, has jumped almost 50% in the past year alone, March’s producer price index (PPI) showed. And the Russia-Ukraine conflict has only made matters worse.

Russia was the world’s top exporter of fertilizers in 2020, sending nearly $8 billion worth of critical fertilizing compounds, including urea and potash, to countries worldwide, according to the Observatory of Economic Complexity. 

Fertilizer prices increases have also been exacerbated by higher costs for natural gas, which is critical in the production of nitrogen-based fertilizers. And fertilizers and chemicals represent 10% to 20% of the total costs for U.S. farmers, Bank of America says. That means consumers should expect higher prices for their favorite vegetables and fruits as the year goes on.

But rising fertilizer prices won’t just lead to higher prices in the produce section. The cost of prepared animal feed has rallied 12.7% since last year, according to Bank of America, which should lead to rising prices for meats as well. 

“There are signs that companies are passing through higher costs,” the Bank of America team said. “Margins look to be growing on both the wholesale and retail level, suggesting that companies have regained pricing power and are comfortable letting the consumer eat higher costs instead of them.”

Busted supply chains, increasing consumption

Rising gas and diesel prices, coupled with labor problems in the trucking industry, are also leading to supply-chain headaches that will only serve to increase food costs for Americans.

The transportation of freight index, which measures the cost of shipping goods in the U.S., jumped an incredible 24.5% year over year in March, largely due to a truck driver shortage that’s been creating problems for suppliers for years. 

“The trucking industry was dealing with a shortage of drivers even before the pandemic; now the market tightened even more dramatically, leading to a surge in trucking costs,” the Bank of America team explained.

On top of that, Americans are now eating more than they have in the past, Bank of America said. Food spending now accounts for 13.5% of U.S. consumers’ spending habits, compared to 13.0% pre-pandemic.

Widespread warnings

Bank of America isn’t the only one warning of rising food costs, either. On Tuesday, U.S. Treasury Secretary Janet Yellen said at the U.S. Department of Treasury’s “Tackling Food Insecurity: The Challenge and Call to Action” event that food insecurity will rise alongside food prices.

Yellen said Russia’s war on Ukraine has only exacerbated “preexisting price and food supply pressures” undermining the U.S.’s economic recovery from the pandemic.

The USDA has also warned that food prices will rise in 2022, but it isn’t as pessimistic as Bank of America. In a March study, USDA researchers concluded that food prices will rise as much as 5.5% this year.