Clothes, Footwear & Housing Costs Push Non-Food Inflation Up Nearly 4%

Nepal’s mid-month CPI data for July–August 2025/26 shows that while food inflation eased due to cheaper vegetables and pulses, non-food and services inflation surged by 3.95% overall, becoming the main driver of rising living costs. With non-food categories holding a dominant weight of 64.51% in the CPI basket, the increases in clothing, footwear, and housing costs have significantly shaped the inflation trend.

Clothes and footwear prices rose by 6.84% overall, with urban households facing a slightly higher burden (+7.04%) compared to rural areas (+6.31%). The rise is linked to higher import prices, especially for textiles and ready-made garments, influenced by the weakening Nepali rupee and global supply chain costs. Seasonal demand, particularly with festival shopping approaching, has also supported the price hike.

Housing and utilities increased by 1.02% overall, reflecting higher electricity, water, rent, and maintenance costs. Rural households saw a 0.75% rise, while urban households recorded a slightly higher increase of 1.11%, underscoring the structural pressures of city living. Coupled with furnishing and household equipment (+5.06%) and miscellaneous goods and services (+10.60%), housing-related costs have become a persistent driver of inflationary pressure.

The combined impact of clothes, footwear, and housing demonstrates how non-food inflation is now dominating Nepal’s CPI. While falling vegetable prices (−18.56%) brought food inflation down by 2.28%, the relief is quickly eroded by rising costs in essentials like housing, utilities, and everyday non-food goods. This divergence highlights the shifting nature of Nepal’s inflation, where the service and non-food economy are becoming central to the cost-of-living debate.