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

Published on September 26, 2025

The comparative CPI data between Nepal and India reveals that while both countries share similar inflationary patterns, their trajectories diverge during certain months due to differences in food supply, import dependency, and domestic policies.

From 2022/23 to 2024/25, Nepal consistently recorded higher inflation than India. For example, in August 2022/23, Nepal’s inflation stood at 8.26%, compared to India’s 7.00%, a deviation of +1.26 percentage points. This gap persisted throughout the year, averaging 1.68 points higher in Nepal. In 2023/24, the difference narrowed as Nepal averaged 5.44% vs. India’s 5.11%, showing how both countries experienced post-pandemic supply recovery and stable global energy prices.

By 2024/25, inflation levels almost converged, with Nepal at 4.06% and India at 3.91%, just a 0.16-point difference. Month by month, the two nations moved almost in tandem, reflecting shared exposure to global commodity markets and cross-border trade linkages.

However, in August 2025/26, for the first time in four years, Nepal’s inflation fell below India’s. Nepal recorded 1.68%, while India stood at 2.07%, a -0.39 deviation. This reversal reflects Nepal’s sharp fall in food inflation—thanks to better harvests and stable imports—while India faced higher agricultural price pressures due to monsoon irregularities.

This trend highlights that while Nepal and India often move together in inflation cycles, driven by shared reliance on food and energy imports, their domestic supply conditions and policy responses can cause short-term divergence. For Nepal, falling food inflation has provided temporary relief, while for India, structural agricultural risks have kept inflation slightly higher.

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.