New Delhi, June 25 -- Not so long ago, the Indian economy was described by the finance ministry and the central bank as being in a 'Goldilocks' scenario, which is characterized by low inflation and high growth. The primary driver was a sustained period of low and declining inflation, which incidentally also led to higher real economic growth even though nominal growth had been decelerating.

However, estimates of inflation in the last six months have placed a question mark on such claims.

Consumer price index (CPI) data released this month confirmed apprehensions of inflation trending higher. Overall inflation was reported at over 3.9% for May, with rural inflation at nearly 4.3% outpacing the 3.5% urban inflation rate. The trend in food...