Consumer prices fell on a monthly basis by 0.4% in the month to mid-February, but prices still increased by 10.2% year on year, according to the NRB. This represented a slowdown from the rate of inflation in the previous month, of 11.3%, but was still faster than the 9.5% average rate recorded in the first seven months of 2010/11. Inflation also accelerated faster than the government's projection for the year as a whole, of 7%, as was announced in November 2010 by the then finance minister, Surendra Pandey.

At a year-on-year rate of 16.6%, inflation in the food and beverages category, which has a weighting of 46.8% in the overall consumer price index (CPI), was the main contributor to overall inflation in mid-February. There were especially sharp rises in the prices of cereals and grains (12.2%), vegetables (73.1%), fruits (26.1%) and spices (20%). Meanwhile, non-food inflation stood at 5% year on year, down from 6.1% in the previous month. At 13.3% year on year, the rate of inflation was fastest in the Kathmandu Valley, followed by the Hills region (at 11.3%) and the southern Terai plains (7.3%).

Wholesale price inflation also slowed on a year-on-year basis in mid-February, with prices up by 11.8%, compared with 12.8% in the previous month. The 13.7% year-on-year rise in the price of agricultural commodities, mainly owing to a 24.7% increase in the price of fruit and vegetables, was the main contributor to wholesale price inflation. The price of domestically manufactured commodities rose by 9.8% in mid-February, while the price of imported commodities was up by 9.6%, partly owing to an 18.3% surge in the price of imported petroleum and coal. In the first seven months of 2010/11 wholesale price inflation averaged 9.7% year on year.

Salaries and wages continue to rise more rapidly than the CPI, meaning that those in paid employment are on average still better off in real terms, despite the fast pace of inflation. In mid-February overall salaries and wages were up by 3.6% month on month and by 16.5% year on year. However, the overall increase was wholly owing to higher wages among agricultural, industrial and construction workers, with year-on-year wages rising by 28.5%, 10.6% and 20.2% respectively. The salaries paid to those employed in the civil service, public corporations, banks and financial institutions, the army and police, education establishments, and other private institutions were unchanged on both a monthly and a yearly basis. Salaried professionals have therefore seen a sharp decline in their real earnings owing to the high pace of inflation recorded in the first seven months of 2010/11.