Inflation Drops to 4.06 Percent in FY 2024/25

Nepal’s annual average inflation moderated to 4.06 percent last fiscal year, 2024/25, down from 5.44 percent a year earlier, according to the latest macroeconomic update released by Nepal Rastra Bank (NRB) on Sunday, August 24. The figure stayed within the government's expectation of containing inflation within 5.5 percent.

Year-on-year (y-o-y) consumer price inflation fell sharply to 2.20 percent in mid-July 2025, compared with 3.57 percent a year ago.

The annual average food and beverage category inflation stood at 4.69 percent in 2024/25 compared to 6.47 percent a year ago. The y-o-y food and beverage category inflation stood at -1.19 percent in mid-July 2025 compared to 4.04 percent a year ago.

Within the category, vegetables surged 10.71 percent, ghee and oil 8.72 percent, pulses and legumes 7.90 percent, and cereal grains 6.13 percent. By contrast, prices of spices fell 2.62 percent, while meat and fish dipped 0.34 percent.

In the non-food and services group, annual inflation averaged 3.71 percent, compared to 4.64 percent the year before. The y-o-y non-food and services category inflation stood at 4.12 percent in mid-July 2025 compared to 3.26 percent a year ago.

The steepest increases were in miscellaneous goods and services (9.39 percent), clothing and footwear (6.09 percent), alcoholic drinks (5.65 percent), furnishing and household equipment (4.78 percent), and tobacco products (4.37 percent).

Inflation trends varied by geography. Annual average consumer price inflation stood at 3.77 percent in the Kathmandu Valley, 4.14 percent in the Tarai, 3.86 percent in Hill areas, and 4.89 percent in Mountain regions. By mid-July 2025, y-o-y inflation eased to 2.32 percent in the Valley, 1.85 percent in the Tarai, 2.19 percent in Hills, and 3.75 percent in Mountain areas.

Across provinces, Koshi recorded the highest annual average inflation at 5.46 percent, followed by Sudurpashchim (5.02 percent) and Madhesh (4.14 percent). Inflation was lowest in Karnali (3.31 percent), Gandaki (3.32 percent), Bagmati (3.57 percent), and Lumbini (3.70 percent). By mid-July, y-o-y inflation ranged from 1.71 percent in Gandaki to 3.67 percent in Koshi.

Rural areas faced steeper price rises than cities. Inflation averaged 4.40 percent in rural areas, compared with 3.94 percent in urban areas. In mid-July 2025, y-o-y inflation was 2.40 percent in rural areas and 2.14 percent in urban areas.