Urban vs Rural Inflation 2025/26: Which Areas Face Higher Living Costs?

Nepal’s mid-month CPI data for July–August 2025/26 shows that both urban and rural households are facing inflationary pressure, but the nature of the burden differs. The overall CPI increased by 1.68% year-on-year, with urban inflation at 1.70% and rural inflation at 1.65%. While the difference in headline numbers seems small, the underlying drivers reveal distinct challenges for each group.

In rural areas, the Food and Beverages group (40.68% weight) declined by 2.16%, largely because of a 16.88% drop in vegetable prices. This eased pressure on household food spending. However, non-food expenses surged more strongly—education costs rose by 10.40%, miscellaneous goods and services climbed by 10.79%, and clothing & footwear increased by 6.31%. These increases highlight how rural families, despite cheaper vegetables, are struggling with steep rises in schooling and daily service-related expenses.

In contrast, urban households saw food inflation fall by 2.33%, slightly more than in rural areas, thanks to a sharper 19.29% drop in vegetable prices. Yet, other food categories like ghee and oil (+10.57%) and milk & eggs (+2.47%)offset some of the relief. On the non-food side, urban consumers faced significant rises in education (+7.29%), clothes & footwear (+7.04%), and miscellaneous services (+10.53%). Housing and utilities also increased modestly at +1.11%, reflecting the higher cost of city living.

The comparison suggests that while rural families benefit slightly more from cheaper vegetables, they are hit harder by rising education and service costs. On the other hand, urban households enjoy lower food inflation but continue to face structural pressures in housing, utilities, and lifestyle-related expenses. Overall, both groups experience inflation differently—rural inflation feels heavier in essential services, while urban inflation is felt more in daily non-food living costs.