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  5. Dearness allowance hike: AICPI-IW for June 2026 points to 83% DA amid 8th Pay Commission buzz

Personal Finance News

Dearness allowance hike: AICPI-IW for June 2026 points to 83% DA amid 8th Pay Commission buzz

Upstox
By Upstox News Desk

3 min read | Updated on August 04, 2026, 08:05 IST

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SUMMARY

While the final DA hike decision is in the hands of the government, calculation based on the 7th CPC formula points to a 3% hike.

dearness allowance hike news

The DA hike estimate remains unchanged even after further jump in AICPI-IW in June 2026. | Image: Shutterstock

Amid growing buzz around the 8th Central Pay Commission (CPC), the latest All India Consumer Price Index for Industrial Workers (AICPI-IW) points to a 3% hike in dearness allowance (DA), taking it to 63% of basic pay with effect from July 1, 2026, under the 7th CPC norms.
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The Labour Bureau under the Ministry of Labour and Employment on Friday, July 31, 2026, reported a 1.1-point increase in the All India Consumer Price Index for Industrial Workers (AICPI-IW) for June 2026. As per 7th Pay Commission, this data will be used for DA hike calculation of central government employees with effect from July 1, 2026.

Based on the AICPI-IW data till May 2026, the estimated DA hike was 3% of the Basic Pay. The estimate remains unchanged even after a further jump in AICPI-IW in June 2026 (See calculation below).

In May, the AICPI-IW increased by 0.9 points to 150.8 from 149.9 in April 2026. The AICPI-IW for March was 149.1 and 148.5 in February.

“The All-India CPI-IW for June, 2026 increased by 1.1 points and stood at 151.9 points (one hundred fifty-one point nine),”the Labour Bureau said in a press release dated July 31, 2026.

The year-on-year inflation for June 2026 stood at 4.76% as compared to 2.55% in June, 2025.

GroupsMay, 2026June, 2026
Food & Beverages154.9157.1
Pan, Supari, Tobacco & Intoxicants175.7176.8
Clothing & Footwear156.9157.6
Housing140.6140.6
Fuel & Light159.6159.2
Miscellaneous147.3148.0
General Index150.8151.9
Source: Labour Bureau

DA hike calculation

The central government announces DA hike for employees twice a year. The first hike is effective from January 1 while the second raise comes into effect from July 1. The DA hike calculation is done based on the norms approved by the 7th Pay Commission. Accordingly, DA is calculated using he following formula:

DA = [{(Average AICPI-IW of last 12 months x 2.88)−261.41}/261.41]×100-Existing DA(%)

While the final DA hike decision is in the hands of the government, calculation based on the above formula confirms a 3% hike.

For understanding, let's calculate the DA hike as per the above formula.

The last 12-month data for DA hike calculation are below:

MonthAICPI-IW
July 2025146.5
August 2025147.1
September 2025147.3
October 2025147.7
November 2025148.2
December 2025148.2
January 2026148.6
February 2026148.5
March 2026149.1
April 2026149.9
May 2026150.8
June 2026151.9
Average148.65

The last 12 months' average AICPI-IW is 148.65. We can put this in the above formula to guess the expected hike:

DA = [{(148.65 x 2.88)−261.41}/261.41}×100]-60%

Here's a step-by step calculation:

Step 1: 148.65×2.88=428.112
Step 2: 428.112−261.41=166.702
Step 3: 166.702/261.41 = 0.637696
Step 4: 0.637696×100=63.7696
Step 5: 63.7696−60) = 3.7696
From the above, the DA works out to be approx. 3.77%. This makes the case for a 4% DA hike. However, the government usually rounds off the digits after the decimal point to the nearest lower value. This means the expected DA could be 3%, same as we had estimated last time.
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Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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