Dearness allowance calculation: How will the DA hike from July 2026 be decided? Explained

The next DA hike may be announced in the second half of the current calendar year and be effective from July 1, 2026.

DA hike calculation is done as per the recommendation of the 7th Pay Commission, using the AICPI-IW data of the past. The formula used for this is as follows:

The AICPI-IW for March 2026 increased by 0.6 points to 149.1 points. Since July 2025, AICPI-IW has increased from 146.5 to 149.1 (See table below).

However, the next three months' data would be crucial for determining the DA hike.

Using the above numbers in the DA calculation formula, we can get an estimated DA hike number. However, such an estimate could be wrong as the actual DA hike will also need to factor in the AICPI-IW data for April, May, and June 2026. For the sake of understanding the calculation process, let's continue with our assumption.

The last 12 months' average AICPI-IW data is 148.51. Using this in the above formula, the expected DA hike works out to be around 3%

DA = [{(148.51 x 2.88)−261.41}/261.41}×100]-60%

• Step 1: 148.51 x 2.88 = 427.7088

• Step 2: 427.7088 - 261.41 = 166.2988

• Step 3: 166.2988/261.41 = 0.6361

• Step 4: 0.6361x100 = 63.61

• Step 5: 63.61-60 = 3.6%

Please note that the above calculation is for understanding only. The final DA hike number may be different after taking into account the April, May, and June AIPI-IW numbers.