Nepal vs India Inflation 2025/26: Why Nepal’s CPI Fell Below India’s for the First Time

The latest CPI comparison between Nepal and India highlights a historic shift in regional inflation trends. In August 2025/26, Nepal’s year-on-year inflation stood at just 1.68%, while India’s was higher at 2.07%. This marks the first time in four years that Nepal’s inflation has fallen below India’s, reversing the usual pattern where Nepal consistently recorded higher price growth.

Looking back, Nepal’s inflation averaged 7.74% in 2022/23, compared to India’s 6.06%, with Nepal running 1.68 percentage points higher. In 2023/24, the gap narrowed but Nepal still stayed above India at 5.44% vs. 5.11%. By 2024/25, the difference was almost negligible (4.06% vs. 3.91%). Now, in 2025/26, Nepal’s inflation has not only converged but actually dropped below India’s by 0.39 percentage points.

This shift is largely explained by falling food inflation in Nepal, where cereals, vegetables, and pulses have seen price relief due to good harvests and stable imports. Meanwhile, India’s CPI has remained slightly higher, partly due to uneven monsoon effects on agriculture and stronger service-sector inflation. For Nepal, however, the story is not without concerns—non-food and services costs remain elevated, suggesting that structural inflationary pressures are simply masked by falling food prices.

For households, this decline means groceries are relatively cheaper than in past years, but rising expenses in housing, utilities, and education still limit overall relief. For investors and policymakers, the narrowing inflation gap with India could have trade implications, especially in cross-border pricing and competitiveness.