New Delhi, Sept. 15 -- India's economy, which grew a stronger-than-expected 7.8% in the June quarter, is facing fresh headwinds as food and fuel prices continue to surge while price pressures start trickling into the broader economy. Both retail and wholesale inflation accelerated sharply in August, the two datasets released on Monday showed, with the broader rise fanning expectations of a rate hike sooner than later.

Consumer price inflation rose to a 20-month high of 4.82% in August from 4.45% in July, breaching the Reserve Bank of India's 4% midpoint target for the third consecutive month. Wholesale price inflation, meanwhile, inched closer to the double-digit mark, rising to 9.92% from 9.78%, as geopolitical tensions pushed up energy...