Dearness Allowance: July CPI-IW Jumps 1%; What It Means for Central Government Employees

The upcoming announcement will be based on AICPI-IW data from January to June 2025. If current trends continue, a 3% DA hike is likely, which will be effective from July 1, 2025.

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Dearness Allowance

Ahead of the much-awaited dearness allowance (DA) hike for Central Government employees, the latest All India Consumer Price Index for Industrial Workers (AICPI-IW) data for July 2025 shows a noticeable jump. The index rose by 1.03% or 1.5 points, compared to just 1 point (0.69%) in June, signaling a sharper increase in inflationary pressures.

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Ministry of Labour and Employment

According to the Labour Bureau under the Ministry of Labour and Employment, the AICPI-IW index moved from 145 points in June 2025 to 146.5 points in July. For comparison, the index had climbed to 145 in June from 144 in May.

"The All-India CPI-IW for July 2025 increased by 1.5 points and stood at 146.5 (one hundred forty-six point five)," the Labour Bureau said in an official statement.

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How the Index Works

The Labour Bureau calculates the CPI-IW every month using retail price data from 317 markets across 88 industrially significant centres nationwide. This index is closely monitored because it reflects the inflation experienced by industrial workers and forms the basis for DA calculations.

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Will July’s Data Affect the September DA Hike?

While July’s jump may grab headlines, experts say it will not affect the DA hike expected in September 2025. The upcoming announcement will be based on AICPI-IW data from January to June 2025. If current trends continue, a 3% DA hike is likely, which will be effective from July 1, 2025.

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Looking Ahead: January 2026 and the 8th Pay Commission

July’s data will, however, influence the DA rate that comes into effect in January 2026. This future rate will also play a role in calculating the minimum pay under the 8th Pay Commission, once the commission submits its recommendations.

At present, the government is yet to announce the Terms of Reference or the chairperson for the 8th Pay Commission. Once set up, the commission is expected to take 1–1.5 years to submit its report. After implementation, the DA rate will be reset to zero under the new pay structure, marking a fresh start for allowances.