Non-Food CPI Trends: Rising Pressures on Households in Nepal

While food prices in Nepal have recently declined, the story is very different for non-food CPI, which has been steadily rising and putting pressure on household budgets. Data shows that non-food CPI inflation, which includes housing, utilities, education, healthcare, transport, and other essential services, was 9.01% in FY 2021/22 and 7.72% in FY 2022/23, before easing to 3.26% in FY 2023/24. Yet by FY 2024/25, non-food inflation climbed back up to 4.12%, and mid-August 2082/83 (2025/26) data shows it still elevated at 3.95%. This suggests that while overall inflation has cooled, households continue to feel the pinch from rising costs in critical non-food categories.

The drivers of non-food inflation are structural and persistent. Energy and fuel prices, though stabilized globally, remain relatively high in Nepal due to import dependency and taxation. Housing rents and utility costs continue to climb in urban centers, while education and healthcare expenses are rising steadily, disproportionately affecting middle- and lower-income households. Transport costs, influenced by fuel prices and logistical inefficiencies, also contribute to this upward pressure. Unlike food inflation, which is seasonal and volatile, non-food inflation tends to be sticky, meaning it doesn’t fall quickly even when the broader economy slows.

For households, this trend poses a unique challenge. Falling food prices may offer temporary relief, but the savings are often offset by rising bills for rent, fuel, education, and healthcare. This dual pressure—deflation in food but persistent inflation in non-food items—creates an uneven impact across income groups. Low-income families may benefit more from cheaper food, but urban households, which spend a larger share on non-food goods and services, continue to face rising living costs.

From a policy perspective, rising non-food CPI highlights the need for structural reforms in sectors like housing, energy, health, and education. Without addressing these cost drivers, Nepal risks seeing subdued overall inflation numbers that do not reflect the lived reality of rising household expenses. The government’s ability to stabilize fuel supply, control utility tariffs, and improve efficiency in public services will determine whether household pressure eases in the coming years.