DA hike: CPI-IW rises to 153.2; is 64% DA likely for central govt employees? Here’s what the calculation shows

The All-India Consumer Price Index for Industrial Workers (CPI-IW) rose 1.3 points to 153.2 in July 2026, giving the first indication of where Dearness Allowance (DA) for central government employees could head from January 2027.

The Labour Bureau, under the Ministry of Labour and Employment, released the July CPI-IW data on 31 August. The index rose from 151.9 in June 2026. Year-on-year CPI-IW inflation stood at 4.57% in July, against 2.66% a year earlier.

Under the 7th Pay Commission framework, DA is revised twice a year, effective 1 January and 1 July, and the calculation is linked to the CPI-IW.

January 2027 DA calculation currently points to 64%

The calculation for the January 2027 DA revision uses the 12-month CPI-IW average from August 2025 to July 2026. The readings during this period were 147.1, 147.3, 147.7, 148.2, 148.2, 148.6, 148.5, 149.1, 149.9, 150.8, 151.9 and 153.2.

This gives a 12-month average of 149.21.

The DA formula uses the CPI-IW series on the 2001=100 base:

DA = [(12-month average CPI-IW – 261.42) ÷ 261.42] × 100

The current CPI-IW series is published on a 2016=100 base. Using the linking factor of 2.88 to convert the latest series to the older base, the average of 149.21 translates to about 429.72 on the 2001=100 scale.

The resulting calculation is:

[(429.72 – 261.42) ÷ 261.42] × 100 = 64.37%

On the data available so far, this puts the January 2027 DA calculation at around 64%.

However, this is not yet the final January 2027 DA rate. The calculation will incorporate CPI-IW readings for August, September, October, November and December 2026 as they become available. A change in those readings will change the 12-month average and, consequently, the calculated DA.

The Labour Bureau has scheduled the August 2026 CPI-IW release for 30 September.

What about the DA due from July 2026?

The July 2026 CPI-IW reading is separate from the DA revision effective from 1 July 2026. The government is yet to formally announce the July 2026 DA rate.

The previous DA rate is 60%, after the Union Cabinet approved a 2 percentage-point increase from 58% to 60% with effect from 1 January 2026.

The July 2026 revision is based on the CPI-IW data for the preceding calculation period. The government announces the revised rate after taking a formal decision, so the effective date and announcement date can be different.

For employees, the impact of a higher DA rate depends on basic pay. For example, if the DA moves from 60% to 64%, the increase would be four percentage points of basic pay. On a basic pay of ₹18,000, that would mean an additional ₹720 a month in DA. On a basic pay of ₹44,900, the additional DA would be ₹1,796 a month. These figures represent the DA component alone and do not include changes to other salary components.

The July CPI-IW reading therefore provides an early benchmark for the January 2027 DA revision. At 153.2, it has pushed the running calculation to around 64%, but the final percentage will depend on the next five CPI-IW readings and the government's eventual approval.