National CPI at 1.68%: Food Prices Fall (-2.28%) but Services Surge Nearly 4%

Nepal’s overall inflation for mid-July to mid-August 2025/26 stood at 1.68% year-on-year, reflecting a mixed picture for households. The latest CPI data shows that while food prices fell by -2.28%, easing grocery bills for consumers, non-food and services inflation surged by 3.95%, creating significant upward pressure on the overall cost of living.

The decline in food inflation was largely driven by falling prices of vegetables, cereals, and certain spices, which brought short-term relief to both rural and urban families. However, the savings at the market were quickly offset by rising costs in essential non-food categories. Education fees, housing rents, clothing, healthcare, and utilities all registered increases, making services the dominant driver of inflation in Nepal.

The rural-urban breakdown also highlights differences. Rural households recorded non-food inflation of 4.37%, slightly higher than the 3.82% seen in urban areas, showing that villagers are bearing a heavier cost burden for services and essential needs. Urban families, meanwhile, benefitted from sharper food price declines, particularly in vegetables, though this advantage is eroded by rising housing and education costs in cities.

Overall, the national CPI data underlines a structural shift: falling food prices are no longer enough to shield households from inflation, as service-sector costs are steadily climbing. This trend could reshape consumption patterns, forcing families to cut back on discretionary spending to cope with rising non-food expenses.