Kathmandu CPI Update: Services Push Inflation While Food Costs Decline

The Consumer Price Index (CPI) for July–August 2025/26 shows that Kathmandu Valley’s inflation reached 2.26% year-on-year, climbing from 102.61 last year to 104.93. On a monthly basis, compared to June–July 2025, prices rose by 0.70%, confirming that inflationary pressure persists in the capital region despite cheaper food items.

The Food and Beverage group (27.21% weight) recorded a -2.10% decline year-on-year, with the index falling from 105.22 to 103.02. This indicates that household grocery costs have eased, particularly in vegetables and cereals, which saw seasonal price drops. For many families, this provided short-term relief in essential consumption.

However, the Non-food and Services group (72.79% weight) surged by 3.95% year-on-year, with the index rising from 101.63 to 105.64. This increase highlights growing expenses in housing, education, healthcare, utilities, and personal services. As a result, the savings from cheaper groceries are being eroded by rising service-related costs, making services the primary driver of inflation in the Valley.

In summary, Kathmandu Valley’s inflation is shifting from being food-driven to service-driven. While households are paying less for food, rising costs in services and non-food items are keeping overall inflation elevated, reflecting deeper structural pressures in the urban economy.