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By Sandeep Chaudhary

Is Nepal Winning the Battle Against Inflation? CPI Data Reveals Key Insights

Is Nepal Winning the Battle Against Inflation? CPI Data Reveals Key Insights

Nepal’s latest CPI data suggests that the country is making steady progress in controlling inflation, though challenges remain. The year-on-year CPI growth slowed to just 1.68% in August 2025/26, down from 4.09% in 2024/25, 7.52% in 2023/24, and a high of 8.26% in 2022/23. This marks the lowest inflation rate in four years and indicates that policy measures, improved food supply, and stable global prices are easing pressure on households.

The breakdown reveals a dual trend. On one hand, food prices have moderated or declined, particularly cereals, vegetables, and pulses, offering much-needed relief to families. On the other hand, non-food and services—such as housing, utilities, education, and healthcare—continue to rise steadily, showing that structural inflation is shifting away from food-driven shocks toward service-driven costs.

This shift means that while Nepal may be “winning” against short-term food inflation, the battle against long-term service-sector inflation is still ongoing. For consumers, this translates into cheaper grocery bills but continued financial strain in education, healthcare, and living expenses. For policymakers, the challenge is to sustain low overall inflation while addressing structural inefficiencies in non-food sectors.

In short, Nepal is turning a corner on headline inflation, but the real test lies ahead: managing rising service costs that are increasingly shaping the country’s inflation trajectory.

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