Inflation gauge closely monitored by the Federal Reserve moved higher in January, with prices rising by 2.8% compared to the previous year, according to the Commerce Department. However, excluding the volatile food and energy categories, core prices rose by 3.1%, up from 3% in the previous month, marking the highest in nearly two years. This increase is expected to significantly increase inflation if sustained, which could raise inflation far above the 2% annual target set by the Fed. The war with Iran, which began on February 28 and has shut down the Strait of Hormuz, is likely to raise inflation in the short run. Consumer spending also increased by 0.4%, indicating that consumers are still able to drive steady growth.