The NEPSE Journal
Market commentary, data deep-dives, and trading notes from the NEPSE Trading desk.
Nepal recorded 1.68% annual inflation in July–August 2025/26. Food prices fell across all regions, easing household grocery costs, but non-food and services rose up to 5.06%, making Kathmandu Valley and Mountain the most inflation-pressured regions. Services have become the new engine of inflation, outweighing food price relief.
The Mountain belt saw 2.59% inflation year-on-year in July–August 2025/26. Food prices declined -1.15%, but non-food and services jumped 5.06%, making it the most inflation-hit region among all ecological belts.
The Hill region experienced 1.56% inflation year-on-year in July–August 2025/26. Food prices dipped -1.51%, but non-food and services rose 3.31%, keeping household costs stable yet increasingly service-driven.
Terai inflation stood at 1.33% year-on-year in July–August 2025/26. Food prices dropped by -3.03%, easing household grocery costs, but non-food and services surged 4.17%, becoming the main driver of rising living expenses.
Kathmandu Valley inflation hit 2.26% year-on-year in July–August 2025/26. Food prices fell by -2.10%, but non-food and services surged 3.95%, making services the main driver of rising living costs.
Across Nepal’s provinces, non-food inflation is the main driver of rising living costs, with Koshi (6.26%) and Madhesh (4.67%) leading the surge. Food inflation has eased in most regions, but education, housing, and services continue to push expenses higher, hitting rural families hardest.
Nepal’s national CPI rose 1.68%, with food prices falling -2.28% but non-food and services surging nearly 4%. While cheaper food eased pressure, rising education, housing, and utility costs are keeping household budgets under strain, especially in rural areas.
In 2025/26, rural households faced higher non-food inflation at 4.37%, compared to 3.82% in urban areas. Although both benefited from falling food prices, service-sector costs are rising faster in rural Nepal, widening the rural-urban inflation gap.
Sudurpaschim Province posted 0.31% overall inflation, as food prices dropped by -2.47%, easing household expenses. Yet, non-food inflation of 2.05% kept service-sector costs high, with both rural and urban families equally affected by rising education, housing, and service prices.
Karnali Province recorded 1.79% overall inflation, with food prices staying stable at -0.26% but non-food inflation climbing to 3.12%. Urban households are more affected than rural ones, as education, housing, and services continue to drive living costs higher.