Historical Trends: Nepal’s CPI Outpaced India by 1.68% on Average Since 2022

Published on September 26, 2025

Over the past four years, Nepal’s inflation has consistently run higher than India’s, reflecting structural weaknesses in supply chains, food dependency, and limited policy buffers. The average CPI gap since 2022/23 stands at 1.68 percentage points, highlighting how Nepalese households have faced greater price pressures compared to their Indian counterparts.

In 2022/23, Nepal’s inflation averaged 7.74%, while India’s stood at 6.06%, creating a gap of 1.68 points. The divergence widened in months like April and May 2023, when Nepal’s CPI ran more than 3 percentage points above India’s, largely due to food inflation and higher import costs.

By 2023/24, the difference narrowed but persisted, with Nepal at 5.44% versus India’s 5.11%. Both countries saw inflation ease as global energy prices stabilized, but Nepal’s sharper reliance on imported essentials kept it slightly higher.

In 2024/25, inflation levels nearly converged—Nepal at 4.06% and India at 3.91%, a gap of just 0.16 points. While both nations followed similar seasonal cycles, Nepal’s inflation spikes were sharper in winter months (peaking at 6.05% in December vs India’s 5.22%).

Finally, in August 2025/26, Nepal’s CPI dropped to 1.68%, falling below India’s 2.07% for the first time in four years. This reversal was driven by Nepal’s falling food prices and India’s agricultural price pressures from erratic monsoons.

Nepal’s historical inflation record shows a persistent tendency to outpace India’s, exposing households to higher costs of living. However, the recent reversal in 2025/26 signals a rare shift, raising questions about whether Nepal can sustain lower inflation or if it is simply temporary relief from food price declines.

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.