The latest inflation data based on retail and wholesale prices are yet again giving cautionary signals as spiralling costs continue to dog the pandemic-hit economy. CPI-based inflation stayed stuck above the RBI’s 6% upper bound for the second straight month, with June’s provisional annualised 6.26% only a touch slower than the six-month high pace of 6.3% registered in May. Inflation at the retail level was largely propelled by sharp increases in key food item prices including oils and fats, which surged almost 35% from a year earlier and gained 2.9% from May’s levels, as also egg, which jumped 19.4% year-on-year and 6.2% from the preceding month, and pulses and products, which climbed 10% from June 2020. According to RBI officials, fuel inflation, which excludes petrol and diesel, surged to a record 12.7% in June driven by LPG, kerosene and the rural poor’s mainstay, firewood and dung-cake. And, disconcertingly, LPG and kerosene prices have also registered increases so far in July. Transport costs remain persistently high as both petrol and diesel prices continue to rise. , with the former now averaging Rs 102.92 a litre in the four major metros as on July 12, and diesel at almost Rs 94, according to the Bulletin article. With manufacturing activity contracting in June for the first time in 11 months as per IHS Markit’s PMI, the economy is visibly struggling to regain traction in the wake of the second wave, which has eroded demand and consumptive capacity in both urban and rural markets. Add to this the looming possibility that this year’s monsoon rains may be less than adequate, either temporally or spatially, disrupting agricultural output and the outlook for both inflation and growth gets significantly clouded. The Government must, at the very least, cut fuel taxes to ease the burden on consumers.