The Reserve Bank of India’s (RBI) revised inflation projection of 4.8%-4.9% could be breached in first half of FY19 due to rising crude oil prices, said a report.

Factoring in the evolving crude oil price situation, retail price inflation is expected to hit 4.6 percent in FY19 compared with 3.7 percent in FY18, according to a report by India Ratings and Research (Ind-Ra).

The surge in domestic fuel prices was a result of a sustained escalation in global crude oil prices last month. India imports up to 84 percent of its energy needs.

“A decline in industrial production, vehicle sales and air traffic, and hardening of interest rates in the economy will have an impact on the decision of the RBI’s monetary policy committee,” it said.

“Expect another rate hike during the remainder of FY19, but attache a low probability to a rate hike in the August 2018 policy review,” added the report.

Indian economy is in a much better shape than it was in 2013, said the Ind-Ra report adding that it was recovering from the twin shocks of demonetisation and the Goods and Services Tax (GST) roll-out.

However, the report said rising crude oil price and a weak rupee have given jitters to the economy.

The report also said the average value of the Indian rupee will depreciate 4 percent to 67 against $ in FY19 this fiscal owing to global factors such as lower capital inflows to emerging markets, a likely slippage on the fiscal consolidation roadmap and a higher current account deficit due to the high crude oil prices.

“The pace of capital inflows and foreign currency assets has a strong impact on the value of the Indian rupee,” Ind-Ra said.

The rating agency maintained its FY19 GDP growth forecast at 7.4 percent.