Nepal's annual inflation rate increased to 5.04% in May 2026, up from 4.47% in April, reaching its highest point since January 2025. Food and beverage inflation stood at 4.63%, while non-food and services inflation was higher at 5.26% for the month. The average inflation rate for the first ten months of the fiscal year remained lower at 2.66%.
The uptick comes as Nepal Rastra Bank is formulating its monetary policy for fiscal year 2026/27. Acting Governor Kiran Pandit said the policy must support high economic growth while also maintaining economic stability, balancing inflation, financial stability, and market expectations.
The central bank currently maintains an accommodative stance, with the policy repo rate at 4.25% and the bank rate at 5.75%. Industry bodies are pressing for further easing, including a permanent single-digit interest rate regime and a bank rate capped at 5%, though the rising inflation figure may complicate any move toward looser policy. NRB also issued notices for Rs 45 billion and Rs 25 billion in one-year bonds on July 1 and July 3, 2026 respectively, as part of its liquidity management operations.