The latest official data on retail prices and industrial production released provide cause for disquiet, given that inflation continues to accelerate and output at the country’s factories contracted for a second straight month. While inflation quickened to a four-month high of 5.52% in March, as per provisional data from the National Statistical Office, the NSO’s quick estimates of the Index of Industrial Production for February show output including at mines, the manufacturing sector and electricity generators shrank 3.6%, following on from January’s 0.9% contraction. Consumer Price Index numbers show that stubbornly high food and fuel costs remain the main drivers of price pressures. Pulses and edible oils, key kitchen staples and vital nutritional sources for proteins and fats, have been climbing almost dizzyingly for the last few months, a fact not lost on the RBI. Price pressures are unlikely to ease significantly in the near term, unless the Centre and the States bite the bullet by agreeing to forego some near-term revenue from petroproducts and reduce fuel taxes. The RBI, which has been stridently seeking a reduction in these levies, foresees inflation averaging 5.2% in the April-June quarter. Separately, the IIP data shows mining continuing to backslide, manufacturing struggling for traction with output of capital goods, construction gear and consumer non-durables all contracting in February. And if one considers that these data sets are yet to reflect the likely disruptions caused by the upsurge in Covid-19 infections and the local containment measures, the signs are even more worrying. Policymakers face tough choices in trying to nurse back demand. And they must do this without letting quickening inflation undermine purchasing power and overall economic stability. How they manage to keep a balance between all the three elements is  yet to be seen.