Inflation’s Downward Trend Continues

Consumer price inflation in Nepal continued to ease in mid-October 2025. It fell to 1.47 percent, down from 4.82 percent a year earlier, according to the Macroeconomic and Financial Situation Report released by Nepal Rastra Bank on Sunday, 16 November.

Inflation had surged to 8.64 percent in mid-September 2022, the highest in 74 months. It fluctuated over the following year and remained elevated at 8.19 percent in mid-September 2023. Except for a brief rise in mid-January 2024, it eased to 3.57 percent by mid-July 2024. It rose again in the following months, reaching 6.05 percent in mid-December 2024. Since then, it has declined steadily, a trend economists attribute to weak demand.

The monetary policy for the current fiscal year targets to keep inflation around 5 percent and maintain foreign exchange reserves adequate for seven months of imports. However, foreign exchange reserves rose 11.3 percent to Rs 2,979.81 billion by mid-October 2025 from Rs 2,677.68 billion in mid-July 2025. Based on recent import trends, Nepal’s current forex reserves are sufficient to cover 19.9 months of merchandise imports and 16.4 months of combined merchandise and services imports, according to the central bank report.

Average inflation in the first quarter (mid-July to mid-October) of the current fiscal year stood at 1.67 percent. It was 4.26 percent in the same period last year.

Food and beverage inflation fell 2.54 percent in the review month. Non-food and services inflation stood at 3.80 percent. A year ago, both categories had risen sharply by 7.20 percent and 3.49 percent, respectively.

Within food and beverages, prices rose for ghee and oil (7.75 percent), non-alcoholic drinks (3.71 percent), and meat and fish (3.15 percent). The vegetable index fell 15.63 percent. Spices dropped 7.82 percent. Pulses and legumes declined 4.41 percent.

In the non-food and services group, the year-on-year index for miscellaneous goods and services increased 15.51 percent. Education rose 7.67 percent. Clothes and footwear increased 6.29 percent. Tobacco products were up 4.84 percent. Furnishing and household equipment rose 4.55 percent.

Urban inflation stood at 1.53 percent. Rural inflation was slightly lower at 1.29 percent.

Koshi Province recorded the highest inflation at 2.33 percent. It was followed by Karnali (1.91 percent), Lumbini (1.89 percent), Madhesh (1.20 percent), Gandaki (1.16 percent), Bagmati (1.13 percent), and Sudurpashchim (0.69 percent).

By ecological belts, inflation was highest in the Mountain region at 2.33 percent. The Hill region recorded 1.50 percent. Kathmandu Valley saw 1.43 percent. The Terai region posted 1.29 percent.