Why Nepal’s Inflation Surged in Late 2024 While India’s Stayed Moderate

Published on September 26, 2025

The CPI data for late 2024 (November–December 2024/25) shows a striking contrast between Nepal and India. Nepal experienced one of its sharpest inflation spikes in years, while India’s inflation remained comparatively moderate.

In November 2024, Nepal’s CPI jumped 5.60%, followed by an even higher 6.05% in December—the peak of that fiscal year. This surge was fueled mainly by seasonal food shortages during winter, when fresh supplies of vegetables and cereals tighten, and reliance on imports increases. The pressure was compounded by festival demand (Tihar and Chhath), higher transport costs, and non-food price hikes in housing, utilities, and health services. For Nepalese households, these months were particularly difficult, with grocery and service costs peaking simultaneously.

India, by contrast, recorded 5.48% in November and 5.22% in December, keeping inflation close to the 5% mark. While India also experienced seasonal food pressures, its larger and more diversified agricultural base, better storage infrastructure, and stronger policy interventions helped keep prices relatively stable compared to Nepal. India’s inflation stayed more balanced between food and non-food categories, whereas Nepal’s was highly food-driven during this period.

The difference highlights how structural weaknesses in Nepal’s supply chain and reliance on imports make its inflation more volatile, especially in food-heavy months, while India’s scale and policy tools allow for better moderation. This explains why Nepal saw a sharp inflation spike in late 2024, while India managed to contain price growth more effectively.

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.