August CPI Data: Nepal Records 1.68% Inflation While India Hits 2.07%

Published on September 26, 2025

The latest August 2025/26 CPI data highlights a historic shift in South Asia’s inflation trends. For the first time in four years, Nepal’s inflation fell below India’s, with Nepal recording 1.68% year-on-year inflation, compared to India’s 2.07%. This represents a -0.39 percentage point deviation, showing how the two economies—though closely linked—are currently experiencing different inflationary pressures.

In Nepal, the slowdown is largely driven by falling food prices, especially cereals and vegetables, thanks to favorable harvests and stable imports. This has eased the financial burden on households, bringing CPI growth down to its lowest level in years. However, non-food and services costs—including housing, utilities, healthcare, and education—continue to rise, suggesting that structural service-driven inflation is still present beneath the headline slowdown.

India, on the other hand, recorded higher inflation at 2.07%, reflecting agricultural price pressures linked to uneven monsoon conditions, along with steady rises in service-related costs. While the gap between the two countries is small, it marks a significant reversal of the past trend where Nepal consistently recorded higher inflation than India (averaging +1.68 percentage points higher in 2022/23 and +0.34 points in 2023/24).

For households in Nepal, the decline in food inflation offers short-term relief in grocery expenses, while for investors and policymakers, the trend suggests a need to monitor non-food inflation risks that may re-emerge later in the year. Regionally, the convergence and reversal of inflation rates highlight how cross-border economies move together but can diverge due to domestic supply and weather shocks.

Policy Lessons from India: Can Nepal Control Inflation More Effectively?

India has kept inflation relatively moderate through strong agricultural systems, buffer stocks, and inflation-targeting policies, while Nepal has historically struggled with food-driven volatility. Nepal’s CPI fell below India’s in 2025/26 for the first time in four years, but to sustain this trend, Nepal must strengthen supply chains, adopt buffer policies, and set clearer inflation targets.

Inflation Convergence in South Asia: What Nepal-India CPI Data Reveals

Nepal and India’s inflation rates, once far apart, have gradually converged—Nepal’s CPI dropping from 7.74% in 2022/23 to 1.68% in 2025/26, while India’s remained steadier around 2–5%. For the first time in four years, Nepal’s inflation fell below India’s, highlighting both shared regional cycles and unique domestic vulnerabilities.

Nepal vs India: Monthly CPI Comparison and Regional Economic Impact

Nepal’s inflation fell to 1.68% in August 2025/26, below India’s 2.07%, reversing a four-year trend. While both economies share similar seasonal inflation cycles, Nepal’s sharper food-driven spikes contrast with India’s steadier, monsoon-driven patterns. Regionally, this convergence impacts household costs, trade competitiveness, and economic stability.

Inflation Gap Narrows: Nepal’s Deviation with India Falls to -0.39% in 2025/26

In August 2025/26, Nepal’s CPI stood at 1.68%, lower than India’s 2.07%, with the inflation deviation dropping to -0.39% for the first time in four years. While Nepal gained from falling food prices, India’s inflation stayed higher due to agricultural pressures, though both countries continue to face rising service costs.

Cross-Border Inflation Trends: How Nepal and India’s Prices Move Together and Apart

Nepal and India’s inflation trends usually move in sync, reflecting shared regional and global factors. But in August 2025/26, Nepal’s inflation (1.68%) fell below India’s (2.07%) for the first time in four years, thanks to easing food prices in Nepal, while India faced higher agricultural pressures.

Nepal vs India Inflation 2025/26: Why Nepal’s CPI Fell Below India’s for the First Time

In August 2025/26, Nepal’s inflation dropped to 1.68%, falling below India’s 2.07% for the first time in four years. While food price declines drove Nepal’s slowdown, India’s inflation held slightly higher due to agricultural pressures. However, Nepal’s service costs remain a long-term challenge, even as headline CPI looks favorable.