Dearness Allowance (DA) hike calculation: AICPI-IW at 148.2 in December, what's expected now

The Labour Bureau of the Ministry of Labour and Employment has reported no change in the All India Consumer Price Index for Industrial Workers (AICPI-IW) for the month of December 2025. As per the 7th Pay Commission recommendations, this data is used for calculating the dearness allowance and dearness relief hikes for central government employees and pensioners respectively.

"The All-India CPI-IW for December, 2025 remained at 148.2 points (one hundred fortyeight point two).," the Labour Bureau said in a press release dated January 30, 2026.

DA hike calculation: What to expect?

The DA hike for central government employees is due from January 1, 2026. Some reports have suggested that the DA/DR may be hiked by 3% to 5%. However, a rough calculation using the DA formula hints at only a 2% hike. Let's understand:

DA is calculated using the following formula, based on 7th CPC recommendations.

• The existing DA is 58% of Basic Salary/Pension

• The AICPI-IW of the last 12 months is as follows:

From the above: the average AICPI-IW for the past 12 months works out to be 145.38. By putting this in the formula, the DA can be calculated as follows

Calculation steps:

• 145.38×2.88=418.6944

• 418.6944−261.41=157.2844

• 157.2844/261.41 = 0.601677

• Converting the above to percentage: 0.601677 x 100 = 60.17%

From the above, the rate of DA works out to be 60.17%, which is 60% after rounding off. As the current DA is 58%, the expected DA hike works out to be only 2%.

Please note that the above is a rough calculation to help you get an idea about the expected DA hike.

The actual decision on the DA hike is to be taken by the Union Cabinet, chaired by the Prime Minister, which may or may not go by what is expected. Nevertheless, employees and pensioners can hope for a raise in DA/DR.