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

Published on September 26, 2025

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.

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.