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

Published on September 24, 2025

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.

Policy Lessons from India: Can Nepal Control Inflation More Effectively?

India has kept inflation relatively moderate through strong agricultural systems, buffer stocks, and inflation-targeting policies, while Nepal has historically struggled with food-driven volatility. Nepal’s CPI fell below India’s in 2025/26 for the first time in four years, but to sustain this trend, Nepal must strengthen supply chains, adopt buffer policies, and set clearer inflation targets.

Inflation Convergence in South Asia: What Nepal-India CPI Data Reveals

Nepal and India’s inflation rates, once far apart, have gradually converged—Nepal’s CPI dropping from 7.74% in 2022/23 to 1.68% in 2025/26, while India’s remained steadier around 2–5%. For the first time in four years, Nepal’s inflation fell below India’s, highlighting both shared regional cycles and unique domestic vulnerabilities.

Nepal vs India: Monthly CPI Comparison and Regional Economic Impact

Nepal’s inflation fell to 1.68% in August 2025/26, below India’s 2.07%, reversing a four-year trend. While both economies share similar seasonal inflation cycles, Nepal’s sharper food-driven spikes contrast with India’s steadier, monsoon-driven patterns. Regionally, this convergence impacts household costs, trade competitiveness, and economic stability.

Inflation Gap Narrows: Nepal’s Deviation with India Falls to -0.39% in 2025/26

In August 2025/26, Nepal’s CPI stood at 1.68%, lower than India’s 2.07%, with the inflation deviation dropping to -0.39% for the first time in four years. While Nepal gained from falling food prices, India’s inflation stayed higher due to agricultural pressures, though both countries continue to face rising service costs.

Cross-Border Inflation Trends: How Nepal and India’s Prices Move Together and Apart

Nepal and India’s inflation trends usually move in sync, reflecting shared regional and global factors. But in August 2025/26, Nepal’s inflation (1.68%) fell below India’s (2.07%) for the first time in four years, thanks to easing food prices in Nepal, while India faced higher agricultural pressures.

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

In August 2025/26, Nepal’s inflation dropped to 1.68%, falling below India’s 2.07% for the first time in four years. While food price declines drove Nepal’s slowdown, India’s inflation held slightly higher due to agricultural pressures. However, Nepal’s service costs remain a long-term challenge, even as headline CPI looks favorable.