INSTANT VIEW 4-Indian annual inflation at 10.72 pct on Oct 25

NEW DELHI, Nov 6 (Reuters) - India's wholesale price index
INWPI=ECI rose 10.72 percent in the 12 months to Oct. 25,
marginally above the previous week's annual rise of 10.68
percent, government data showed on Thursday.

The rate was also above a median forecast of 10.45 percent
in a Reuters poll of analysts.

For a graph of Indian inflation, click on:
www.reutersindia.net/econ%20indicators.htm
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KEY POINTS:
SUB-INDEX (WEIGHTING) Oct 25 Oct 18 Pct change
PRIMARY ARTICLES (22.025) 249.9 248.8 +0.4
Food articles (15.402) 243.9 243.0 +0.4
FUEL,POWER, LIGHT
AND LUBRICANTS (14.226) 369.3 369.3 --
MANUFACTURED PRODUCTS (63.749) 205.3 205.4 --
Food Products (11.538) 204.1 204.4 -0.1
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Note: Articles in CAPITALS are sub-indices. Articles in lower
case are specific categories within the sub-indices.
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- Annual inflation for the week ended Aug. 30 was revised
up to 12.38 percent from 12.10 percent.

- The wholesale price index stood at 238.5 points in the
week ended Oct. 25.

- Annual inflation was 3.11 percent during the corresponding
week of the previous year.

COMMENTARY:

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

"There is actually no cue, globally or domestically, that
inflation is rising. The trend is of declining prices and that
is what matters now."

"Nobody bothers what happened in one week and this rise is
not going to have any impact in the monetary policy, for sure."

SAUGATA BHATTACHARYA, ECONOMIST, AXIS BANK, MUMBAI:

"This is not likely to be any sustained increase ... we are
pretty much on track as far as inflation is concerned.

"Probably by mid-December or even earlier, we may see
inflation coming down to single digits."

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI:

"Inflation has come higher than market expectations as well
as ours. The week has possibly seen an upward pressure from
food articles, it being Diwali week.

"We do not necessarily see this increase as a precursor to
inflation inching up again. We expect significant decline in
headline inflation in the coming week on the back of a sharp
correction in ATF (aviation turbine fuel) prices. We could
possibly see a single-digit number."

SAUMITRA CHAUDHURI, ECONOMIC ADVISER, DOMESTIC RATINGS
AGENCY ICRA, NEW DELHI:

"It is slightly higher than expected. One had expected it
would show a small decline from the previous week's 10.68
percent. We maintain that in the coming weeks we can expect a
decline in the rate of inflation.

"The central bank is on easing mode due to other factors
which have gained paramount importance and decline in the rate
of inflation should help."

INDRANIL PAN, ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI:

"This doesn't change the direction on the monetary policy,
which will be lower. I think this is an aberration, or maybe
just because of the base effect."

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

"Inflation continues to remain below 11 percent and I think
with the kind of easing we are now seeing in crude oil and
metal prices, inflation now continue to move southwards.

"From the week on week aberration we must not make any
conclusion about the trend, as the factors are very conducive
for easing of inflation.

"By the end of March, I think inflation will be between 7.5
to 8 percent.

"Going forward the central bank will wait and watch for
some time, and if they feel that despite the rate cuts the
effective cost of lending is still not effective, then they
will go for another repo rate cut.

"Also they will undertake a reverse repo reduction so that
banks do not have incentive to park surplus funds with the
central bank."

A. PRASANNA, ECONOMIST AT ICICI SECURITIES, MUMBAI:

"This is a bit of a surprise, coming in higher than
expectations and also above the recent trend. However, we view
this as a one-off instance and expect inflation to keep falling
in coming weeks, and see it dipping into single digits in the
next couple of readings and falling to below 5.5 percent by
March 2009."

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

"This marginal rise in inflation is an exception, otherwise
inflation is moderating and expected to come down to 10 per
cent by December end."

"Inflation can come down to 7-8 per cent by the end of
fiscal (year). With improvement in investment environment, the
Reserve Bank may consider to further cut interest rates, which
are already on decline.

MARKET REACTION:

- The partially convertible rupee INR=IN was little
changed at 47.60/67 per dollar, from 47.60/64 just before the
data was released. The rupee had closed at 47.46/50 on
Wednesday.

- The 10-year bond yield IN082418G=CC rose to 7.72
percent, from 7.70 percent before the announcement. It had
ended at 7.76 percent in the previous session.

- The 30-share BSE index .BSESN extended losses to be
down 3.2 percent at 9,795.41 points. It was down about 2.5
percent before.

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

BACKGROUND:

- Annual inflation peaked at 12.91 percent on Aug. 2.

- In the past month, the central bank has slashed its main
short term lending rate by 150 basis points to 7.5 percent and
banks' cash reserve requirements by 350 basis points to 5.5
percent of deposits to ease a cash crunch and shore up growth.

- Managing liquidity and supporting growth have become the
short-term priority for policy makers given a sharp cash
squeeze in Indian markets and worries about a global recession.

- The Reserve Bank of India sees inflation at 7 percent at
the end of the 2008/09 fiscal year in March.
(Additional reporting by Mumbai and New Delhi Treasury teams)
(Reporting by Rajkumar Ray; Editing by John Mair/Mark
Williams) ((surojit.gupta@thomsonreuters.com;
+91-11-4178-1016; Reuters Messaging:
surojit.gupta.reuters.com@reuters.net))