Retail inflation swells to 7.44%

India’s retail inflation surged to 7.44% in July, driven by higher prices of vegetables, cereals, and pulses, with food inflation at its highest level in 39 months. The spike in inflation, which surpassed economist forecasts, poses challenges for fiscal and monetary policymaking. The rise in food prices, which make up a significant portion of household budgets, could squeeze households’ finances. The inflation numbers also highlight the risk of climate-driven supply shocks in managing inflation in the future. The Reserve Bank of India is expected to maintain a mildly hawkish stance in response to the inflationary pressures.