Inflation stays low at 1.47% as trade surges

KATHMANDU: Nepal Rastra Bank (NRB), the country’s central bank, has released its assessment of Nepal’s macroeconomic and financial conditions based on data from the first three months of fiscal year 2025/26.

According to the report, year-on-year inflation remained low at 1.47 percent. Gross foreign exchange reserves stood at USD 2,979.81 billion. Total merchandise imports and exports rose by 19.8 percent and 89.6 percent, respectively. The NEPSE index reached 2,487.17 in mid-October 2025, down from 2,742.88 in mid-October 2024.

Likewise, the year-on-year consumer price inflation was 1.47 percent in mid-October 2025, a significant decline from 4.82 percent in the same period last year. Wholesale price inflation for consumption goods fell by 1.24 percent, while intermediate and capital goods recorded increases of 2.71 percent and 2.40 percent, respectively. The wholesale price index for construction materials rose 3.88 percent during the review month.

Meanwhile, merchandise exports surged 89.6 percent to Rs. 72.78 billion in the first quarter of FY 2025/26, compared to a 6.1 percent decline in the same period last year. Exports to India and other countries grew 137.9 percent and 3.8 percent, respectively, while exports to China fell 66.1 percent.

Major export gains were seen in soybean oil, palm oil, jute goods, cardamom, and polyester yarn and thread, whereas exports of zinc sheets, particle boards, tea, woolen carpets, and oil cakes declined.

Imports during the same period rose 19.8 percent to Rs. 468.08 billion, reversing a 4.2 percent drop in the previous year. Imports from India, China, and other countries increased by 7.5 percent, 33.4 percent, and 46.5 percent, respectively. Key import increases included crude soybean oil, chemical fertilizers, gold, transport equipment, vehicles and spare parts, and telecommunication equipment, while hot-rolled sheet in coil, edible oil, garlic, oilseeds, and petroleum products saw a decrease.

The total trade deficit expanded 12.2 percent to Rs. 395.30 billion, compared to a 4.0 percent decline during the same period last year. Meanwhile, the export-import ratio improved to 15.5 percent, up from 9.8 percent in the corresponding period of FY 2024/25.