The consumer price index including owner occupiers' housing costs 12-month inflation rate was 2.7 percent in August, up from 2.6 percent in July.
Consumer prices climbed 2.9 percent year-over-year in August, faster than the 2.6 percent rise in July. "In addition, prices of onions, while still high, have retreated from the peak recorded in late-August".
According to data released by the government, the retail inflation rate for the month of July stood at 2.36 per cent.
While inflation has risen sharply in the past year largely on the back of the pound's fall since Britain's vote to leave the European Union, the economy has slowed sharply as living standards have been squeezed by higher prices. "Retail inflation is likely to be pressured in the coming months", said Kavita Chacko, senior economist at Care Ratings, told IBTimes India.
The pound rose 0.9 percent against the dollar, to $1.3279, and strengthened 0.9 percent against the euro, which was at 0.9011 pounds.
Prices in all broad categories were in August 2017 than a year ago, the data showed, and there were rises in all measures of inflation, including producer input prices, showing inflationary pressures continue to build.
Inflation rose to 2.36 percent in July, after consistently falling for three straight months.
However, they said it is possible that more rate-setters will vote for a hike, most likely the BoE Chief Economist Andy Haldane, thus widening the split in the Monetary Policy Committee to 6-3.
India's industrial production increased 1.2 percent year-on-year in July, which was in line with the market consensus.
"The larger-than-expected rise in United Kingdom inflation in August has thrown the spotlight back on the United Kingdom interest rate debate". Within the miscellaneous items, the inflation for transport and communication increased to 3.71%, health 4.33%, household goods and services 4.24% and recreation and amusement to 3.67%, while it eased for education 4.40% in August 2017. The annual growth was forecast to increase to 2.8 percent.
These rises mean those on the lowest incomes will be hit hardest.
The fuel and light segment witnessed a marginal quickening: at 4.94% from 4.86% in July. With very well-developed and complex supply chains, it can take a number of years for a decline in the exchange rate, which raises import prices, to feed through fully to consumers.