8th Pay Commission: AICPI-IW, the key to DA, rises in August. How will it affect 8th CPC salary?

"The All-India CPI-IW for August, 2025 increased by 0.6 point and stood at 147.1 (one hundred forty-Seven point One)," the Labour Bureau said in a press release.

How is this relevant for 8th Pay Commission salary?

The AICPI-IW data is used for determining the rate of dearness allowance (DA) hike for central government employees. This is done based on the formula recommended by the 7th Pay Commission.

DA helps employees in combating the impact of inflation on the purchasing power of their monthly salaries.

The next DA hike will come into effect from January 1, 2026. It will be decided based on the AICPI-IW data of six months from July to December 2025.

The AICPI-IW data in July and August has already increased by 1.5 points and 0.6 points respectively. If it continues to increase over the next four months, then central government employees may expect a bigger DA hike from January 2026.

Interestingly, the rate of DA applicable in January 2026 may also be used by the 8th Central Pay Commission (CPC) to decide the minimum salary hike factor, or the fitment factor. Therefore, a higher rate DA in January 2026 may lead to a little higher fitment factor under the 8th CPC.

Please note that the DA may be reset to zero after the implementation of the 8th CPC recommendations. However, the 8th Pay Commission is yet to be set up. Therefore, one can't be sure whether or how it will use dearness allowance or inflation for deciding the minimum salary hike factor.