Nepal Inflation Rate 2026: CPI Trend Based on 8-Month Data
Nepal's Consumer Price Index (CPI) based inflation has been on a notable upward trend since late 2025. According to the Nepal Rastra Bank's (NRB) eight-month report for FY 2025/26 (mid-July 2025 to mid-March 2026), annual inflation averaged 2.13% — but the latest monthly reading tells a more pressing story.
Monthly CPI Inflation Trend (2025/26)
The following data tracks Nepal's year-on-year CPI inflation month by month:
| Period | Y-o-Y Inflation (%) |
|---|---|
| Mid-Jul to Mid-Aug 2025 | 1.68% |
| Mid-Aug to Mid-Sep 2025 | 1.87% |
| Mid-Sep to Mid-Oct 2025 | 1.47% |
| Mid-Oct to Mid-Nov 2025 | 1.11% |
| Mid-Nov to Mid-Dec 2025 | 1.63% |
| Mid-Dec 2025 to Mid-Jan 2026 | 2.42% |
| Mid-Jan to Mid-Feb 2026 | 3.25% |
| Mid-Feb to Mid-Mar 2026 | 3.62% |
Key Observations
1. Inflation trough in mid-November: Inflation reached its lowest point at 1.11% in mid-November 2025. This was likely a reflection of a good agricultural harvest and stable energy prices.
2. Sharp acceleration from December onwards: From mid-December 2025, inflation started climbing rapidly — from 1.63% to 3.62% in just four months. This represents a 2.51 percentage point increase in a short span.
3. Mid-March 2026 at 3.62%: This is the highest monthly reading in the current fiscal year cycle. If this trend continues, Nepal could see inflation approaching or exceeding 4% in the coming months.
What Is Driving Inflation Higher?
- Food prices: Seasonal factors and higher demand during festivals tend to push food prices up in the Nepali calendar's winter-spring transition.
- Import costs: Nepal imports a large share of its goods. Currency movements and global commodity prices pass through to domestic inflation.
- Energy prices: Petroleum and cooking gas prices influence transportation and food production costs.
- Economic recovery: As Nepal's economy improves (GDP projected at 3.99%), demand-side pressures on prices are rising.
Province-Wise Inflation (Mid-March 2026)
Inflation is not experienced equally across Nepal. As of mid-March 2026:
- Madhesh Province: 4.95%
- Lumbini Province: 4.21%
- Koshi Province: 3.96%
- Kathmandu Valley: 3.64%
- Bagmati Province: 3.31%
- Gandaki Province: 2.87%
- Karnali Province: 2.21%
The Terai belt (Madhesh, Lumbini) is experiencing elevated price pressures, likely due to higher import dependency and food price volatility along the border regions.
Nepal Rastra Bank's Inflation Target
The NRB typically targets inflation in the range of 5.5-6.5% for monetary policy purposes. At 3.62%, Nepal remains comfortably below this target, but the rapid rise in recent months is a signal that the NRB will be monitoring price trends carefully before considering any policy adjustments.
Outlook
If the current trajectory continues, Nepal's annual average inflation for FY 2025/26 could end up in the 3-4% range — higher than the 8-month average of 2.13%, as recent months carry greater weight toward the year-end figure. For consumers, particularly in border provinces, the next 2-3 months will be key to watch.