The NEPSE Journal
Market commentary, data deep-dives, and trading notes from the NEPSE Trading desk.
In July–August 2025/26, Manufactured Goods inflation rose 1.09%, with Food, Beverage & Tobacco leading at +4.51%. Rising costs in textiles, plastics, and metals show that industrial and consumer goods are driving wholesale inflation, signaling potential pass-through effects to retail markets.
Nepal’s Fuel and Power wholesale prices fell 3.1% in July–August 2025/26, driven by a 3.99% drop in fuel costs, while electricity remained stable. The decline offers short-term relief for industries and transport, but global energy volatility poses ongoing risks.
Nepal’s Primary Goods inflation hit 3.73% in July–August 2025/26. Food prices rose 3.66%, while non-food primary goods surged 4.80%, signaling continued cost pressure from both consumer essentials and industrial raw materials.
Nepal’s wholesale inflation is being driven primarily by food prices and metals, while fuel costs are relatively stable. This suggests that while consumers may see some relief in energy prices, the cost of essential foods and construction-related inputs continues to push wholesale inflation higher, with potential pass-through effects on retail inflation in the coming months.
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.
Since 2022/23, Nepal’s inflation has averaged 1.68% higher than India’s, reflecting structural food and supply chain pressures. But in August 2025/26, for the first time, Nepal’s CPI (1.68%) fell below India’s 2.07%, marking a potential turning point in the regional inflation trend.
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’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.
In late 2024, Nepal’s inflation surged to 5.60% in November and 6.05% in December, driven by food shortages, festival demand, and rising service costs. India’s inflation, however, stayed moderate at around 5%, thanks to stronger agricultural supply and policy measures.
Nepal’s inflation has dropped sharply from 7.74% in 2022/23 to 1.68% in 2025/26, while India’s has remained more stable around 2%. The shift reflects Nepal’s falling food prices versus India’s agricultural price pressures, but both countries still face service-driven inflation risks.