Recent economic data in India and global financial developments are causing concerns of stagflation in major economies, including India. The retail inflation reading for February from India’s NSO at 6.44 per cent contradicts the RBI’s forecast of 5.7 per cent for Q4 inflation. Even though the RBI raised its benchmark interest rate by 250 basis points since May 2021, core inflation remains persistently elevated, indicating difficulty in controlling price gains. The Monetary Policy Committee members cited the persistence of core inflation as justification for continuing to tighten monetary policy at their last meeting in February. Food prices also show disconcerting trends, with key categories in the food basket registering high year-on-year inflation and sequential hardening. Cereals and products saw inflation accelerate to 16.7 per cent in February, while milk and products quickened to 9.65 per cent, fruits surged to 6.38 per cent, and spices slowed a tad to 20.2 per cent. The prediction of a likely El Niño this year raises concerns about the outlook for food prices. Policymakers need to focus on containing inflation, but the rising uncertainty about the growth momentum sustaining in the face of the heightened risks of a recession in advanced economies raises the risk that higher credit costs may further dampen consumption. However, failure to engender enduring price stability could lead to stagflation. Supply side measures such as GST rationalisation and fuel price cuts need to be expedited to address the overall macroeconomic outlook, which appears worrying. It is essential for policymakers to take proactive measures to address these challenges and ensure a sustainable and stable economic environment that supports growth and protects the well-being of citizens. This may require a combination of monetary policy measures, structural reforms, and targeted fiscal interventions to tackle the root causes of inflation and promote inclusive growth.