Nepal Inflation 2025/26: Overall CPI Rises 1.68% Despite Food Price Drops

Nepal’s consumer price index (CPI) for mid-July/August 2025/26 shows that overall inflation edged up by 1.68% year-on-year, reaching 104.96 points. On a month-to-month basis, the CPI rose by 0.39% compared to June/July 2025. Rural inflation stood at 1.65%, while urban inflation was slightly higher at 1.70%, suggesting price pressures were broadly felt across both areas.

A closer look at the data shows a contrasting trend between food and non-food items. The Food and Beverages group (35.49% weight) registered a 2.28% annual decline, primarily due to a massive fall in vegetable prices, which plummeted by 18.56% overall (urban areas saw an even sharper drop of 19.29%). Spices (-4.81%) and pulses (-1.51%) also contributed to the decline. However, some items surged—ghee and oil prices rose 10.97%, and fruit prices increased 3.01%, putting pressure on household budgets.

On the other hand, the Non-Food and Services category (64.51% weight) surged by 3.95% year-on-year, offsetting the food-related decline. Within this, Education costs shot up by 7.67%, driven by rising tuition and fees, while clothes and footwear (+6.84%) and miscellaneous goods and services (+10.60%) also saw strong hikes. Housing and utilities (+1.02%), health (+2.98%), and transport (+3.94%) recorded moderate increases, showing how essential services continue to push the cost of living higher.

Overall, the CPI highlights a mixed inflationary picture. While households have gained some relief from cheaper vegetables and pulses, this benefit is being eroded by rising costs in non-food sectors such as education, housing, and essential services. The divergence suggests that consumers are experiencing a complex inflation environment—spending less on food but paying significantly more for services and daily necessities.