Higher food inflation could constrain spending on non-food items, India report says

NEW DELHI: Higher food inflation could squeeze spending on non-food discretionary items by absorbing a larger share of household disposable income, the Indian government said in its monthly economic report on Monday. The outlook for domestic food inflation and agricultural output is uncertain because of an intensifying El Nino, which is expected to peak in late 2026. Food prices, global commodity trends, and weather-related risks remain drivers for inflation. India July inflation accelerates to 4.45%, unlikely to alter RBI rate outlook Despite an uncertain global economy, India’s economic activity, inflation and external position have remained relatively stable. Resilient domestic demand has supported growth despite some moderation in the pace of expansion. The Indian government is tracking sovereign bond markets globally. A move in Indian bond yields in either direction poses risks.