INLINE pragma doesn't trigger on locally defined function

I have a function on the form

f = ...g...
  where
    g = ...h...
    h = ...step...
      where step
        | ... = ...g...
        | ... = ...step...
    {-# INLINE h #-}
{-# INLINE f #-}

GHC refuses to inline h, even with an explicit INLINE pragma. I realize that h is part of a loop, g->h->step->g, but it seems to me that it should be possible to inline the non-recursive h anyway.

I've attached a standalone test case (which is a quite a bit longer.) The function f above corresponds to filterWithKey in the test case.

Trac metadata

Trac field	Value
Version	7.4.1
Type	Bug
TypeOfFailure	OtherFailure
Priority	normal
Resolution	Unresolved
Component	Compiler
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