March 7, 2008 / 6:47 AM / 11 years ago

INSTANT VIEW 3-India annual inflation at 5.02 pct on Feb 23

 (Adds analyst comments)
 NEW DELHI, March 7 (Reuters) - India's wholesale price
index INWPI=ECI rose 5.02 percent in the 12 months to Feb.
23, higher than the previous week's rise of 4.89 percent,
government data showed on Friday.
 The rate was higher than a median forecast of 4.78 percent
in a Reuters poll of analysts. It was the highest rate since
June 2 last year.
----------------------------------------------------------------
 -    KEY POINTS:
                    Feb 23           Feb 19        Pct
change
 Primary articles       228.4            225.3         +1.4
 Food articles          224.9            221.2         +1.7
 Manufactured products  190.3            190.2         +0.1
 Fuel, power, light
 and lubricants         336.9            336.9          0.0
 - Annual inflation for the week ended Dec. 29 was revised
to 3.83 percent from 3.50 percent.
 - The annual inflation rate was 6.20 percent during the
corresponding week of the previous year.
 - The wholesale price index stood at 219.5 points in the
week ended Feb. 23.
 COMMENTARY:
 SAUGATA BHATTACHARYA, ECONOMIST, AXIS BANK, MUMBAI: "This
time it seems to have come from primary commodities, which was
totally unanticipated. We had thought that this would come in
from either the fuel group or the manufacturing group, which
doesn't seem to have happened."
 "Right now, till the next policy ... they (the central
bank) will not do anything."
 INDRANIL PAN, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI:
 "It's primary articles which has surprised us. We were
expecting a very moderate increase in the primary articles
index. I think that's the surprise element."
 "From now on, we are in no position to talk of rate
increases or further monetary policy tightening, so far as your
growth perspectives and everything are also concerned. But it
is very much clear now that we would not be looking at lower
rates."
 SONAL VARMA, ECONOMIST, LEHMAN BROTHERS, MUMBAI:
 "Inflation has risen above 5 percent much faster than we
had expected. While some price cuts announced after the budget
will have a positive effect, rising food prices remain a
dominant concern. We expect inflation to remain high in 2008/09
and add to the rising policy dilemma of the RBI of slowing
growth and rising inflation."
 D.K. JOSHI, PRINCIPAL ECONOMIST, CRISIL, MUMBAI:
 "This does not come as a surprise, as pressure on prices
are building up from high food and oil prices. This also
strengthens RBI's stance that you cannot loosen monetary policy
immediately. The pressure for inflation to head up will mount
in coming weeks with monsoon holding the key, given the lack of
buffer and high global food prices."
 MARKET REACTION:
 The yield on the 10-year federal bond IN079917G=CC was at
7.60 percent, one basis point higher than before the data. The
partially convertible rupee INR=IN was at 40.53/54 per
dollar, weaker from 40.505/515 beforehand.
 LINKS: Ministry of Commerce and Industry Web site at
www.eaindustry.nic.in
 BACKGROUND:
 - In its 2008/09 budget released on Feb. 29, the government
lowered some excise duties and raised the threshold for taxable
income.
 - The central bank has said the budget is broadly
consistent with the overall objectives of growth and price
stability.
 - Deputy central bank governor Rakesh Mohan said after the
budget that the government's statement that inflation control
was a top priority was "music to my ears".
 - The central bank aims to keep inflation around 5 percent
for the fiscal year ending March 31.
 - The wholesale price index is more closely watched than
the consumer price index, which is published monthly, because
it covers a higher number of products and is published weekly.
 (Reporting by Surojit Gupta; Editing by Charlotte Cooper)

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