Nepal Inflation Update 2025/26: Overall Index Rises by 1.68% in First Month

Nepal’s overall inflation measured by the Consumer Price Index (CPI) reached 104.96 in the first month of FY 2025/26, reflecting a 1.68% rise compared to the same period last year (2024/25). Over a three-year horizon, the CPI climbed by 4.09%, showing how cost pressures have built up gradually in the economy. On a monthly basis, the increase was modest at 0.39%, suggesting that while inflation remains present, its pace is currently controlled.

A closer look at the Food and Beverages category, which carries a 35.49% weight in the basket, reveals a mixed picture. The index fell by -2.28% year-on-year, largely due to the sharp decline in vegetable prices (-18.56%), supported by reductions in meat and fish (-2.41%) and spices (-4.81%). However, some sub-groups continued to push upward: cereal grains (+9.15% over three years) and ghee and oil (+10.97% year-on-year) added pressure to household food bills. Fruits also rose by 3.01%, while milk, eggs, and sugar products recorded only minor increases.

On the other hand, the Non-food and Services category, with a heavier weight of 64.51%, showed more persistent inflationary pressure. This group rose by 3.95% year-on-year and 2.94% over three years, indicating structural price stickiness. Key drivers included education (+7.67%), clothes and footwear (+6.84%), and miscellaneous goods and services (+10.60%), all of which directly impact household living costs. Meanwhile, housing and utilities (+1.02%), transportation (+3.94%), and health (+2.98%) saw moderate increases. Insurance and financial services remained stable with a slight -0.22% decline, providing some relief.