• WPI fell more than estimated after unexpected CPI acceleration
  • Government to unveil its FY17 spending plans on Feb. 29

India’s wholesale prices fell more than estimated in January after consumer inflation unexpectedly accelerated, complicating the job of policy makers before Prime Minister Narendra Modi’s government presents its budget on Feb. 29.

Wholesale prices fell 0.9 percent in January from a year earlier, the Commerce Ministry said in a statement on Monday, compared with a 0.73 percent decline the previous month. The median of 30 estimates in a Bloomberg News survey had predicted a 0.13 percent decrease. Consumer prices had increased at the fastest pace since August 2014.

Central bank Governor Raghuram Rajan, who uses CPI as a benchmark, kept interest rates unchanged this month and said he’d watch inflation and the budget before adding to four rate cuts last year. While profligate spending risks stoking inflation, government advisers have pointed to declining producer prices to seek lower borrowing costs.

The 5.69 percent increase in CPI was led by a 43 percent surge in pulses, a key ingredient in many Indian recipes.

Rajan is looking to hit a 5 percent consumer-price inflation target for March 2017. He said on Saturday that a certain amount of depreciation in the rupee is needed until inflation is brought down.

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