KALAMAZOO, Mich. (WOOD) — From groceries to gas, almost everything continues to be a budget breaker, thanks to inflation. But what is really driving up those prices and what should consumers look for to indicate any type of relief?

Dr. Matthew Ross, an assistant finance professor at Western Michigan University, says it’s complicated.

“Nobody wants to see the purchasing power in their bank account going down. Certainly, if you’re on a fixed income, if you’re watching that go down, that’s really painful,” Ross said.

The latest numbers show how much it hurts.

On Wednesday, the U.S. Labor Department said its consumer price index (CPI), a well-known benchmark for determining inflation, jumped 8.5% from March 2021 to last month – its biggest yearly increase in more than four decades.

Ross explains part of the reason stems from Russia’s invasion of Ukraine and how sanctions on Russian oil created a domino effect across many industries.

“That (oil) price impacts transfers through all sorts of supply chains, and effectively raises the price of almost everything you buy,” Ross said.

The last time the CPI was this high, the U.S. was nearing the end of the Great Inflation in 1981. At the time, Ross said, the Arab oil embargo was essential. It has major parallels to today’s economic sanctions against Russia.

“The (current) numbers … go back that far to a conflict where oil was a big part of it. Once again, we have a global conflict — or at least, a big regional conflict — where oil is a central player,” Ross said.

He added consumer demand is not helping either.

“People are looking ahead and they’re saying ‘Wow, prices are going up, I better buy today.’ So that creates a feedback to … borrow more funds today on the expectation that prices will keep going up,” Ross explained.

So, what signs could show improvement?

Aside from what happens between Ukraine and Russia, Dr. Ross says to keep an eye on fiscal policy in Washington and monetary policy from the Federal Reserve. The latter means higher interest rates could be on the way, which can be a mixed bag for consumers.

“If the fed raises rates and savers start getting returns on their deposits, they’re going to have an incentive to put money in the bank instead of spend it. That’s going to start to tamp down the rate of inflation,” Ross explained.

However, in that same token, Ross says a bump in interest rates would do the same for mortgages, which means prospective homeowners may have to be more careful when price shopping.