Nepal vs India: Monthly CPI Comparison and Regional Economic Impact

Published on September 26, 2025

The monthly CPI data for 2022/23 to 2025/26 highlights how closely Nepal and India’s inflation trends are linked, yet also how they diverge due to differences in supply chains, agricultural output, and economic structures.

In 2022/23, Nepal’s inflation averaged 7.74%, well above India’s 6.06%, with the gap peaking at more than 3 percentage points in April and May. This reflected Nepal’s heavier dependence on imports, weaker storage and distribution infrastructure, and greater exposure to food price shocks.

By 2023/24, inflation narrowed, with Nepal averaging 5.44% against India’s 5.11%, showing how both economies responded similarly to easing global fuel and commodity prices. Still, Nepal remained slightly higher, underscoring its vulnerability to food-driven volatility.

In 2024/25, the two countries nearly converged, with Nepal at 4.06% and India at 3.91%. Monthly CPI movements showed both economies rising during the festival and winter months (November–December) and cooling in harvest seasons (April–July). However, Nepal’s CPI spikes were sharper, touching 6.05% in December, compared to India’s 5.22%, showing how seasonal shortages hit Nepal harder.

The turning point came in August 2025/26, when Nepal’s inflation fell to 1.68%, dropping below India’s 2.07% for the first time in four years. This reversal was driven by Nepal’s falling food prices (thanks to good harvests and stable imports), while India faced higher agricultural costs due to erratic monsoons.

For Nepalese households, the easing of food inflation has offered short-term relief, though non-food and service inflation (housing, utilities, education, healthcare) continues to weigh on budgets. For Indian consumers, inflation has remained relatively steady but sensitive to monsoon-driven food cycles.

At the regional level, this convergence in inflation shows that South Asia’s economies are interlinked through trade, energy, and agriculture, but their domestic vulnerabilities—Nepal’s reliance on imports and India’s dependence on monsoon rains—create different inflation outcomes. For cross-border trade, a narrower inflation gap may help stabilize price competitiveness, while persistent service inflation in Nepal signals long-term structural challenges.

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.