INSTANT VIEW 3-Indian annual inflation at 4.35 pct on Feb 9

NEW DELHI, Feb 22 (Reuters) - India's wholesale price index
INWPI=ECI rose 4.35 percent in the 12 months to Feb. 9,
higher than the previous week's rise of 4.07 percent,
government data showed on Friday.

The rate was higher than a median forecast of 4.11 percent
in a Reuters poll of analysts.
---------------------------------------------------------------

KEY POINTS

Feb 9 Feb 2 Pct
change Primary articles 225.0 223.6
+0.6 Food articles 221.6 219.9
+0.8 Manufactured products 189.9 189.2
+0.4 Fuel,power, light and lubricants 334.0
334.0 0.0

- Annual inflation for the week ended Dec. 15 was revised
to 3.84 percent from 3.45 percent.

- The annual inflation rate was 6.52 percent during the
corresponding week of the previous year.

- The wholesale price index stood at 218.1 points in the
week ended Feb. 9

COMMENTARY:

LATEST:

SAUGATA BHATTACHARYA, ECONOMIST, AXIS BANK, MUMBAI:

"It's much higher than my expectations. The fuel price
index will be relatively subdued. My fear is that the
manufacturing index is rising and that could have contributed
to a higher number."

D.K. JOSHI, PRINCIPAL ECONOMIST, CRISIL, MUMBAI:

"Fuel price hike will show up in the inflation figures in
the coming weeks. Food prices are a grim scenario. The prices
have gone up in the international market and here also there is
a pressure on prices.

"I expect inflation to touch 5 percent by March-end. The
interest rate scenario will remain the same."

EARLIER:

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI:

"Demand-pull pressures have gone up, which are strongly
reflected in manufactured product prices. Also primary article
prices have developed huge upward potential. Inflation remains
the key concern for the central bank."

A. PRASANNA, ECONOMIST AT ICICI SECURITIES, MUMBAI:

"The numbers are definitely higher than expectations and
with the fuel price hike showing up in headline numbers from
next week, inflation seems to be on an uptrend and may reach
the 5 percent mark very soon."

SONAL VARMA, ECONOMIST, LEHMAN BROTHERS, MUMBAI:

"Inflation is much higher than our expectation, even after
accounting for the steel price hike. We expect the index to
inch up even further next week as the fuel price hikes get
incorporated. We expect inflation to surge above 5 percent in
the first quarter of FY09."

N.R. BHANUMURTHY, ECONOMIST AT INSTITUTE OF ECONOMIC
GROWTH, NEW DELHI:

"We expect inflation to go up to 4.5 to 4.6 percent once
the hike in retail fuel prices are taken into account in the
coming weeks. Food prices are also rising and we expect it go
up for some time.

"Inflation could stand near about 5 percent by March-end. I
don't see any change in central bank's policy stance by
March-end. Banks have started reducing the lending rates
without waiting for RBI's signal."

SHUCHITA MEHTA, CHIEF INDIA ECONOMIST, STANDARD CHARTERED
BANK, MUMBAI:

"Inflation still remains the predominant concern given
elevated commodity prices, including crude, primary products,
and other commodities. Hence expectations for rate cuts in the
near term are premature."

MARKET REACTION:

The yield on the 10-year federal bond IN079917G=CC was at
7.60 percent, up from 7.59 percent ahead of the release of the
inflation data.

The partially convertible rupee INR=IN was at 39.967/977
per dollar, steady from beforehand.

LINKS: Ministry of Commerce and Industry Web site at
http:www.eaindustry.nic.in.

BACKGROUND:

- Central bank deputy governor Rakesh Mohan said last week
that inflation was still high by world standards and should be
brought down further.

- India last week raised prices of auto fuels by around 4
percent, a modest increase which analysts said would nudge
inflation slightly higher and undermined chances of an early
cut in interest rates.

- The statistics office has said it expects the economy to
expand 8.7 percent in fiscal 2007/08, slower than the previous
year as higher interest rates dent consumer demand.

- In a policy review last month, the Reserve Bank of India
kept its key rates steady, saying inflation risks persisted,
but signalled its readiness to act if turbulence in global
markets threatened growth and financial stability.

- A top government panel has said a slowdown among
developed economies may not have a major impact on India but
pressure from high oil and food prices would make managing
inflation a challenge in 2008/09.

- In 2007, annual inflation peaked at 6.69 percent in
January, its highest in more than two years.

- The central bank aims to contain inflation close to 5.0
percent in 2007/08. It wants to condition expectations in the
range of 4.0-4.5 percent with an inflation rate of around 3.0
percent as a medium-term goal.

- The wholesale price index is more closely watched than
the consumer price index (CPI) because it has a higher number
of products in its basket and is published weekly.
(Additional reporting by C.J. Kurrien, V. Ramakrishnan, Saikat
Chatterjee and Anurag Joshi in MUMBAI and Rajkumar Ray in NEW
DELHI)
(Reporting by Surojit Gupta; Editing by Mark Williams)