British inflation held at a one-year low in May despite a jump in fuel prices, leaving the chances of a Bank of England interest rate hike over the coming months finely balanced.
The RBI in its bid to tighten inflation, increased repo rate last week, for the first time in more than four years.
Ruth Gregory, senior United Kingdom economist at Capital Economics said oil prices are expected to fall later this year and overall "the inflation figures have not altered our view that the [Bank of England's] MPC will probably press ahead and raise interest rates in August".
The Federal Reserve on Wednesday is widely expected to raise US rates for the second time this year.
India's annual retail inflation accelerated in May to 4.87 percent, government data showed on Tuesday, mainly driven by faster increases in fuel prices and a fall in the local currency, which pushes up prices of imported goods. Sticking at 2.4pc, the Consumer Price Index (CPI) followed the course expected by economists and predicted in the BoE's May Inflation Report.
The ONS said petrol prices rose by 4.6p per litre between April and May 2018 to 125.3p - the highest since October 2014 - while diesel prices are 4.7p higher. The central bank however, kept its "neutral" policy stance unchanged.
May was the seventh straight month in which inflation was higher than the central bank's medium-term target of 4 percent. Data also revealed that manufacturing output fell 1.4% in April, the biggest decline for almost six years.
However, Brent crude prices have been volatile more recently on reports that Russian Federation and Saudi Arabia could increase oil production.
The rupee has depreciated 5.3 percent since January 1, pushing up the prices of imported items such as electronic goods and machinery.
Inflation remains below wage growth, despite a fall to 2.8% in the three months to April from 2.9% in the period to March.
Inflation hit a five-year high of 3.1 percent in November, pushed up by the pound's tumble after June 2016's Brexit vote and contributing to a squeeze on consumer spending that has slowed Britain's economy.
The International Monetary Fund expects India's economic growth could rebound to 7.4 percent in the 2018/19 fiscal year that began in April, from an estimated 6.7 percent in the previous fiscal year.
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