Dearness Allowance hike July 2025: AICPI-IW jumps to 144; what should Central Govt employees expect?

The All India Consumer Price Index for Industrial Workers (AICPI-IW), which serves as the benchmark for determining DA/DR hikes, increased by 0.5 points to 144 in May 2025. This was the third consecutive month when the key inflation data considered for the DA hike decision moved upwards.

"The All-India CPI-IW for May, 2025 increased by 0.5 point and stood at 144.0 (one hundred forty four)," the Labour Bureau said in a release.

How much hike is expected?

All eyes will now be on the AICPI-IW data for June to decide the final DA rate hike.

After declining in the first two months of 2025, the AICPI-IW has increased in the last three months: from 143 in March to 143.5 in April to 144 in May 2025.

While the rising AICPI-IW data gives a compelling reason for an increase in DA/DR, the final decision is in the hands of the Government, and the extent of the hike can't be predicted.

However, various reports have projected the DA hike to be around 3%. If approved, the DA/DR rate of employees and pensioners will rise to 58% of their basic salary and pension, respectively. This could also be the last hike in DA/DR before the 8th Pay Commission comes into effect.

DA hike is calculated based on average AICPI-IW data of the past months, based on recommendations of the 7th Pay Commission.

When will the DA hike from July 2025 be announced?

The next DA hike will be effective from July. Although July has already arrived, employees and pensioners may need to wait longer for the DA hike announcement. Typically, the Government announces a DA hike effective from 1st July during or at the start of the festival season around September-October.