NEW DELHI, Sept 4 (Reuters) - India's wholesale price index 
<INWPI=ECI> rose 12.34 percent in the 12 months to Aug. 23, below 
the previous week's annual rise of 12.40 percent due to lower 
prices of some foods, government data showed. 
    The rate was below a median forecast of 12.44 percent in a 
Reuters poll of analysts. 
 **************************************************************** 
    KEY POINTS: 
SUB-INDEX           (WEIGHTING)  Aug 23  Aug 16      Pct change 
PRIMARY ARTICLES      (22.025)   248.5   249.6        -0.4 
Food articles         (15.402)   236.9   238.8        -0.8 
FUEL,POWER, LIGHT  
AND LUBRICANTS        (14.226)   376.2   376.2         0.0 
MANUFACTURED PRODUCTS (63.749)   207.1   206.6        +0.2 
Food Products         (11.538)   213.0   212.5        +0.2 
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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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    - Inflation for week ended June 28 was revised up to 12.03 
percent from 11.89 percent. 
    - The wholesale price index stood at 240.3 points in the week 
ended Aug. 23. 
    - Annual inflation rate was 3.94 percent during the 
corresponding week of the previous year. 
    COMMENTARY: 
    KAMAL NATH, INDIAN TRADE MINISTER: 
    "Government is trying to look at supply side stress. We have 
taken some steps, which appear to have taken effect. We do hope 
it will take effect in the next several weeks and months. I 
expect it to further moderate." 
    RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI: 
    "A lot has to do with the easing of global fuel prices which 
is reducing the price levels of the market-determined fuel 
prices. 
    "Also I feel that to some extent the tightening measures also 
are controlling the monetary expansion so both these factors have 
started affecting the pace of rise in inflation. 
    "However, just from two observations we cannot draw any 
significant comfort, the real direction can be assessed only 
after the kharif (summer crop) prospects become clearer in 
end-September. 
    "Inflation will remain in double digit levels till 
end-December and will peak around 13.5 to 14 percent." 
    SONAL VARMA, ECONOMIST, LEHMAN BROTHERS, MUMBAI: 
    "The underlying inflation pressures appear to be moderating 
and this reinforces our view that the RBI is done with hiking 
repo rates. The fall in commodity prices globally should moderate 
input cost pressures and also output price inflation, going 
forward." 
    INDRANIL PAN, CHIEF ECONOMIST AT KOTAK MAHINDRA BANK, MUMBAI: 
"This is a very comforting number and not much different from 
the previous week's. But overall we expect monetary policy to 
stay tight as underlying demand pressures still lurk which may 
lead to higher inflation. We expect inflation to peak at 13-13.25 
percent by end-December." 
    MARKET REACTION: 
    Financial markets closed before the data was released. 
    The 10-year benchmark bond yield <IN082418G=CC> ended at 8.47 
percent, its lowest since June 19 and down 14 basis points from 
Tuesday's close of 8.61 percent. 
    The Indian rupee <INR=IN> ended at 44.35/36 per dollar, 
marginally stronger than 44.38/39 at close on Tuesday. 
    India's main share index <.BSESN> fell 1 percent. 
    Local markets were closed on Wednesday for a religious 
holiday. 
    LINKS: 
    - Ministry of Statistics and Programme Implementation Web 
site at http://www.eaindustry.nic.in 
    BACKGROUND:  
    - The central bank said last week it would tackle strong 
demand pressures as inflation had hardened beyond tolerable 
levels and said was important to ensure its policy stance was not 
diluted by rising government spending. 
    - A new Reserve Bank of India governor, D. Subbarao, takes 
over on Friday and is expected to continue the central bank's 
strong anti-inflation stance. 
    - The RBI sees inflation at the end of the 2008/09 fiscal 
year in March at 7 percent, but has said current levels will 
persist for some months. 
    - Prime Minister Manmohan Singh has said soaring inflation is 
due to external factors, with authorities taking steps to 
insulate the poor while also balancing the need for strong 
economic growth. 
    - Senior officials expect annual inflation to top 13 percent 
soon before starting to cool from December onwards.  
    - The central bank in July raised its benchmark lending rate, 
the repo, to a seven-year of 9.0 percent. A hike in the cash 
reserve ratio took effect on Aug. 30. 
 (Additional reporting by V. Ramakrishnan, Saikat Chatterjee, 
Anurag Joshi and Swati Bhat in MUMBAI and Rajkumar Ray in NEW 
DELHI) 
 (Reporting by Surojit Gupta; Editing by Charlotte Cooper) 
(([email protected]; +91-11-4178-1016; Reuters 
Messaging: [email protected]))  
Keywords: INDIA ECONOMY/