Inflation & CPI in Nepal: Latest Rate, Trend & How NRB Measures It

Nepal's headline measure of inflation is the year-on-year change in the National Consumer Price Index (NCPI), which Nepal Rastra Bank (NRB), the central bank, publishes every month. For fiscal year 2024/25 (2081/82 in the Bikram Sambat calendar, roughly mid-July 2024 to mid-July 2025), the annual average consumer price inflation stood at 4.06 percent. That was down from 5.44 percent in 2023/24, and it fell comfortably within the roughly 5 percent target NRB set in its monetary policy for the year.

The slowdown was driven mainly by food. Annual average food and beverage inflation was 4.69 percent in 2024/25 (down from 6.47 percent a year earlier), while non-food and services inflation was 3.71 percent (down from 4.64 percent). By the end of the fiscal year the disinflation had become sharp: in mid-July 2025 the year-on-year rate had dropped to just 2.20 percent, with food and beverage prices actually falling 1.19 percent from a year earlier while non-food and services still rose 4.12 percent.

Inflation continued to ease into fiscal year 2025/26. Based on NRB's four-month data ending mid-November 2025, the year-on-year rate was only 1.11 percent (against 5.60 percent in the same month a year earlier), and the four-month average was 1.53 percent. Because monthly prints move around festivals, harvests and fuel adjustments, the annual average figure is the most stable number to quote for a given fiscal year.

Nepal's inflation is best understood by separating the two halves of the consumer basket: food and beverage on one side, and non-food and services on the other. Food and beverage carries a weight of about 35.49 percent of the total index under the current base year, so swings in vegetable, oil, pulse and cereal prices move the headline number the most and are what most households feel first.

In 2024/25 the food story was mixed. Vegetables rose 10.71 percent, ghee and oil 8.72 percent, pulses and legumes 7.90 percent and cereal grains 6.13 percent over the year, while spices fell 2.62 percent and the meat and fish sub-group was roughly flat at -0.34 percent. On the non-food side, miscellaneous goods and services rose 9.39 percent, clothes and footwear 6.09 percent and alcoholic drinks 5.65 percent.

This split matters because non-food and services inflation tends to be 'stickier' - it comes from wages, rents, transport and administered charges rather than the weather or import prices, so it falls more slowly. That is exactly what happened at the end of 2024/25 and into 2025/26: even as food prices declined year-on-year, non-food and services inflation stayed near 4 percent, keeping overall living costs from dropping outright for many families.

Over the past several years Nepal's inflation peaked during the global commodity and fuel-price shock of 2022, then trended down as those pressures eased and the domestic economy slowed. The table below shows NRB's annual average national consumer price inflation for recent fiscal years, which is the standard figure quoted for each year.

The trajectory - 6.32 percent, then a peak of 7.74 percent, easing to 5.44 percent and then 4.06 percent - reflects both external factors (imported inflation, especially edible oil and fuel) and domestic ones (a good agricultural supply, weak consumer demand, and a stable Nepali rupee pegged to the Indian rupee). Because a large share of Nepal's goods is imported from or via India, Indian price trends and the NPR-INR peg strongly shape what Nepalis pay.

Note that the 2023/24 and later figures use the rebased NCPI (base year 2023/24 = 100), while earlier years were computed on the previous 2014/15 base. Rebasing changes basket weights and items, so year-to-year comparisons across the base change are broadly indicative rather than exact. Always cite the fiscal year (and BS year) alongside any rate.

Inflation in Nepal is measured through the National Consumer Price Index, a basket approach that tracks the retail price of a fixed set of goods and services that a typical household buys. Nepal Rastra Bank compiles and publishes the NCPI monthly, while the survey that defines the basket and its weights comes from the National Statistics Office (NSO, formerly the Central Bureau of Statistics). The index measures how much more expensive that fixed basket has become compared with a reference point.

The current index was rebased to a base year of 2023/24 = 100, replacing the older 2014/15 base. The basket weights are derived from the Fourth Nepal Living Standards Survey (NLSS-IV), which the NSO conducted from July 2022 to June 2023, covering a nationally representative sample of 9,600 households across 15 analytical strata (the seven provinces split into rural and urban areas, plus the Kathmandu Valley). Rebasing keeps the basket in line with how people actually spend today - for example, reflecting more spending on services, transport and communication than a decade ago.

NRB collects retail prices for 525 items grouped into 12 major COICOP-style groups (food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity and fuels; furnishings and household maintenance; health; transport; communication; recreation; education; restaurants and hotels; and miscellaneous goods and services). Prices are collected on weekly, monthly or quarterly cycles depending on how perishable and volatile each item is, from markets across all provinces, and then combined into national, rural, urban and regional indices.

Inflation is not the same everywhere in Nepal. NRB publishes the index for four ecological belts - Kathmandu Valley, Terai (plains), Hill and Mountain - and by province, and these can diverge by more than a full percentage point in any given month because of transport costs, local supply and the mix of imported versus locally produced goods.

In the review month of mid-November 2025, for instance, year-on-year inflation was 1.16 percent in the Kathmandu Valley, 1.24 percent in the Terai, 0.88 percent in the Hill region and 1.06 percent in the Mountain region. Across the full 2024/25 fiscal year, provincial annual averages ranged from a high of 5.46 percent in Koshi Province to a low of 3.31 percent in Karnali Province, with Bagmati at 3.57 percent, Madhesh 4.14 percent, Lumbini 3.70 percent and Gandaki 3.32 percent.

Remote Mountain and Karnali districts often face higher and more volatile prices for imported goods because of long, difficult supply routes, even when the national headline rate looks tame. This is one reason the single national number, while useful for policy, does not capture the cost-of-living experience of every Nepali household.

For households, inflation - mehangai - directly erodes purchasing power: if wages or remittance income rise more slowly than the CPI, families can afford less. Because food carries such a large weight in Nepal's basket and makes up a bigger share of poorer households' spending, food-price inflation hits low-income and rural families hardest, which is why festival-season and monsoon price spikes draw so much public attention.

For policymakers, the CPI is a core input into decisions. Nepal Rastra Bank sets an inflation ceiling in its annual monetary policy (around 5 percent in recent years) and adjusts liquidity and interest rates partly with that target in mind, though because the rupee is pegged to the Indian rupee, imported inflation from India constrains how much independent control NRB has. The government also uses the CPI when it sets minimum wages, revises civil-service pay and allowances, and frames the annual budget presented around late May.

Readers should be careful to distinguish the inflation rate (how fast prices are rising) from the price level itself. When inflation falls from, say, 5 percent to 1 percent, prices are still rising - just more slowly; they rarely fall outright. Only when a sub-index shows a negative year-on-year figure, as food and beverage did in mid-2025, are those particular prices actually lower than a year before.