Dearness allowance from July 2026: AICPI-IW jumps in April. How will it affect hike calculation?

The Labour Bureau under the Ministry of Labour and Employment reported a 0.8-point increase in the All India Consumer Price Index for Industrial Workers (AICPI-IW) for April 2026. This data will be relevant for calculating the Dearness Allowance (DA) hike for central government employees with effect from July 1, 2026, under the 7th Central Pay Commission (CPC).

In March, the AICPI-IW increased by 0.6 points to 149.1 from 148.5 in February. The AICPI-IW for January 2026 was 148.6.

The AICPI-IW for December 2025 was 148.2. In November and October 2025, the inflation index had increased by 0.5 points and 0.4 points, respectively.

“The All-India CPI-IW for April, 2026 increased by 0.8 points and stood at 149.9 points (one hundred forty-nine point nine),”the Labour Bureau said in a press release dated May 29, 2026.

The year-on-year inflation for April 2026 stood at 4.46% as compared to 2.94% in April, 2025.

All-India group-wise CPI-IW for January and April 2026

How will the April AICPI-IW data affect DA hike calculation?

The April 2026 AICPI-IW increase will be relevant for the DA hike calculation with effect from July 1, 2026, according to the 7th Pay Commission rules.

The DA hike is calculated using the AICPI-IW data of the past 12 months using the following formula:

While the AICPI-IW has been increasing for the last few months, the next two months’ data will be required for accurate calculation. For the sake of understanding, however, the following is a calculation assuming the AICPI-IW increase at the same rate as in April 2026. In this case, the last 12-month data for DA hike calculation would be as follows:

From the above table, the last 12 months' average AICPI-IW data is 148.61. We can use this in the above formula to estimate the expected hike:

DA = [{(148.61 x 2.88)−261.41}/261.41}×100]-60%

Let’s calculate this step-wise:

Step 1: 148.61×2.88=427.9968

Step 2: 427.9968 - 261.41 = 166.5868

Step 3: 166.5868/261.41 = 0.6372

Step 4: 0.6372 x 100 = 63.72

Step 5: (63.72- 60)% = 3.72%

From the above, the DA is 3.72%.

However, the digits after the decimal point is usually rounded down to the nearest lower value. This means the expected DA could be 3%. This is same as the DA hike estimate of the last month.

However, please note that the above estimate is just for understanding the DA hike calculation process. The actual hike will depend on a lot of factors, include the AICPI-IW numbers fo May and June. The final decision on DA hike is cleared by the Union Cabinet chaired by the Prime Minister.