The Office for National Statistics (ONS) said higher transport costs exerted the most upwards pressure on the Consumer Prices Index measure during May amid steep rises in oil costs this year.
The manufacturing sector, which constitute more than 77 per cent of the index, recorded a growth of 5.2 per cent in April, up from 2.9 per cent in the year ago month.
The retail inflation rate in urban areas was 4.88% in May, against 4.42% in April.
The increase shows 0.87% point less that 12.48% recorded in April 2018 and represents the 15th consecutive disinflation since January 2017.
Analysts polled by Reuters had forecast May's CPI inflation at 4.83 percent, compared with April's 4.58 percent.
Inflation rate reduces by 0.87% from April. While reading the decision of the committee, Godwin Emefiele, the CBN governor, said the rates were held because inflation is still above the committee's single-digit target.
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.
Retail inflation rose to a four-month high at 4.87% in May while India's factory output recovered only marginally to grow at 4.9% in April, days after the Reserve Bank of India (RBI) raised interest rates for the first time in four years citing inflation concerns.
However, the percentage change in the average composite CPI for the twelve-month period ending May, 2018 over the average of the CPI for the previous twelve-month period was 11.83%, which is a reduction of 0.19% from that of April. This was caused by the increase in price of potatoe, yam and other tubers, fish, bread and cereals, Oil and fats, vegetables, coffee, tea and cocoa, Meat, Milk, cheese and eggs.
Also, it noted the rural index rose by 1.08 per cent in May, up by 0.26 per cent from the rate recorded in April (0.82) per cent.
On State-by-State basis, the report said food inflation on an annual basis was highest in Yobe (15.86 per cent), followed by Kebbi (15.62 per cent) and Jigawa (15.56 per cent). This is higher than the final figure of 4.58% for April. Kogi, Benue and Akwa Ibom were the three States that recorded the slowest rise in food inflation at 8.54, 9.93 and 11.13 per cent respectively.