From 7.74% to 1.68%: Nepal’s CPI Decline Compared with India’s Steady 2% Inflation

Published on September 26, 2025

Nepal’s inflation story over the past four years shows a dramatic cooling compared to India’s relatively steady trend. In 2022/23, Nepal’s CPI averaged 7.74%, far higher than India’s 6.06%, reflecting global commodity shocks, fuel price hikes, and domestic food shortages. This pattern of Nepal outpacing India continued in 2023/24, though the gap narrowed, with Nepal at 5.44% and India at 5.11%.

By 2024/25, the difference had almost vanished, with Nepal posting 4.06% inflation versus India’s 3.91%. This convergence reflected easing food inflation in both countries, supported by stable energy imports and better agricultural supply. However, Nepal still hovered slightly higher than India due to persistent service inflation.

The real turning point came in 2025/26, when Nepal’s inflation dropped to just 1.68% in August, falling below India’s 2.07% for the first time in four years. This reversal was driven by a sharp decline in food inflation in Nepal—especially cereals and vegetables—while India faced agricultural price pressures from erratic monsoon conditions. Though Nepal’s households enjoy some relief at the grocery level, non-food and service costs (housing, health, education, utilities) remain on an upward path, showing that structural inflation challenges persist beneath the headline numbers.

This divergence highlights how the two economies often move in tandem due to shared global and regional factors, but domestic supply and climate shocks can push them apart. For Nepal, the latest figures suggest short-term consumer relief, while India’s steadier inflation points to resilience but continued agricultural vulnerability.

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.