DA Hike 2025: Central employees and pensioners are expected to get a good increase in dearness allowance (DA) in July 2025. The Consumer Price Index (CPI-IW) released for March 2025 recorded an increase of 0.2 points, taking it to 143.0. Although this is slightly lower than January’s 143.2, this figure is a relief after the continuous decline in CPI-IW from November 2024 to February 2025. This indicates that DA may increase by 2% to 3% in July 2025.

Disappointment with only 2% increase in January-June 2025

For the period January to June 2025, the government had increased DA by just 2%, which was the lowest in the last 78 months. After this increase, DA is currently at 55%. Since DA is revised twice every year i.e. for January and July, now all eyes are on the announcement of July-December 2025. This will be the last DA revision under the 7th Pay Commission as its term ends on 31 December 2025. However, given the current situation, it does not seem possible to implement the recommendations of the 8th Pay Commission from January 2026.

CPI-IW figures raised hopes

The March 2025 data of the All India Consumer Price Index for Industrial Workers (CPI-IW) released by the Labor Bureau under the Ministry of Labor has raised hopes for employees this time. In March, CPI-IW reached 143.0, which is a slight increase compared to February. During this period, the annual inflation rate was 2.95%, which was slightly higher than February. The special thing was that the inflation of food items remained under control, due to which a slight increase was recorded in CPI-IW.

How is DA decided? Know the method of calculation

As per the recommendations of the 7th Pay Commission, DA/DR is calculated based on the average of CPI-IW of the last 12 months. Under the increase implemented from January 2025, DA has now become 55%. Now all eyes are on the CPI-IW data of April, May and June 2025, the average of which will make the final calculation of DA in July 2025.

DA is calculated using this formula:

DA (%) = [(CPI-IW average of last 12 months) – 261.42] ÷ 261.42 × 100

Here 261.42 is the base value.

How much can DA increase in July 2025?

As per the average till March 2025, the estimated DA has reached 57.06%. If the CPI-IW remains stable or increases a little more in April, May and June, then this average can reach 57.86%. Usually after the calculation of DA, it is rounded off to the next whole number. If the average reaches above 57.50%, then DA can be increased to 58%. On the other hand, if this average remains below 57.50%, then DA will remain at 57% only.

Therefore, it is believed that an increase of 2% to 3% in DA in July 2025 is almost certain.

What will happen next?

The CPI-IW data for April, May and June 2025 is yet to come. As soon as the June data comes in late July or early August, the government will announce the new DA and DR to be implemented from July. Whatever marginal increase has been recorded in CPI-IW so far is being considered a positive sign after continuous decline.

If the inflation rate figures remain stable or show a little more increase in the next few months, then it will be a relief news for central employees and pensioners and they may get a DA hike of 2% to 3% in July 2025.