Dearness Allowance: AICPI-IW rises in October. How will it affect DA hike from January 1, 2026?

The Labour Bureau under the Ministry of Labour and Employment has reported another increase in the All India Consumer Price Index for Industrial Workers (AICPI-IW).

The biggest increase in the AICPI-IW data in the last few months was witnessed in July 2025, when the AICPI-IW increased by 1.5 points to 146.5. Thus, the AICPI-IW data has increased consecutively for the last four months.

"The All-India CPI-IW for October, 2025 increased by 0.4 point and stood at 147.7 (one hundred forty-Seven point seven)," the Labour Bureau said in a release dated November 28, 2025.

Source: Labour Bureau

What does the latest AICPI-IW data means for the next DA hike and 8th CPC?

The Labour Bureau's October AICPI-IW data comes a few weeks after the official notification of the Terms of Reference for the 8th Central Pay Commission (CPC).

While the 8th CPC is expected to take 12-18 months to submit its recommendations, central government employees are expecting a hike in their dearness allowance with effect from January 1, 2026 as recommended by the 7th Pay Commission.

According to the 7th Pay Commission, the AICPI-IW data released by the Labour Bureau helps in determining the rate of increase in DA and dearness relief (DR) for central government employees and pensioners respectively.

DR/DR helps employees and pensioners combat the impact of inflation on their monthly pays.

For DA hike with effect from January 1, the AICPI-IW data from July to December 2025 will be used by the government.

The AICPI-IW data has increased in July, August, September and October. If it continues to increase for the next two months (November and December) then central government employees and pensioners may expect a DA/DR hike from January 2026. However, the amount of hike may be only around 2% if the current trend continues.

The rate of DA/DR applicable in January 2026 is also likely to used by the 8th Pay Commission for determining the extent of pay hikes. Higher DA in January may lead to a higher pay hike.

However, the government's resolution has mandated the 8th Pay Commission to review the current allowances provided to employees and pensioners. Therefore, one can't be sure how the rate of DA applicable in January 2026 will eventually impact the pay hike under the 8th CPC.