The NEPSE Journal
Market commentary, data deep-dives, and trading notes from the NEPSE Trading desk.
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.
Lumbini Province recorded 1.35% overall inflation, with food prices falling by -3.25% but non-food and services inflation climbing 4.09%. Urban households face slightly higher cost pressures than rural areas, mainly due to rising housing, education, and service expenses.
Gandaki Province saw 1.03% overall inflation, with food prices falling by -2.24% but non-food services rising by 2.87%. Urban areas faced higher cost pressures than rural households, indicating that while food relief is helping families, service-related inflation remains a concern.
Bagmati Province recorded 1.67% overall inflation, driven mainly by a 3.33% rise in non-food services, while food inflation fell by -2.05%. The Kathmandu Valley emerged as the inflation hotspot, with 3.95% non-food inflation, reflecting higher living costs in the capital compared to rural and semi-urban areas.
Madhesh Province is experiencing 1.69% food inflation and a high 4.67% non-food inflation, with rural households hit the hardest. Rising costs in education, housing, and services, combined with more expensive food items, are placing significant pressure on family budgets.