DA Hike: There’s encouraging news for central employees and pensioners regarding the dearness allowance (DA) increase for July 2026, as the Ministry of Labor and Employment has released the Consumer Price Index (AICPI-IW) data for June 2026. The All India Consumer Price Index for Industrial Workers rose by 1.1 points to reach 151.9 in June 2026. Analyzing the data from the past year suggests that the government may raise the DA for employees and the dearness relief (DR) for pensioners by 3% to 4% for the period from July to December 2026.

To understand how the DA is calculated from the AICPI-IW data, the government looks at the 12-month average index from July 2025 to June 2026, which stands at 148.65. Using the formula established by the 7th Pay Commission, the current DA rate is calculated to be 63.77%. The potential increase hinges on the government’s rounding policy. If they round down, the DA would rise from 60% to 63%, reflecting a 3% increase, as suggested by Manjeet Singh Patel, president of the All India NPS Employees Federation.

Conversely, if the government rounds up to the nearest integer, the DA would increase to 64%, resulting in a 4% hike. Employee unions are advocating for the DA to be implemented based on the full decimal point rather than rounding, or for the entire DA to be merged with the basic salary.

 

AICPI-IW Index: Trend over the last 12 months

 

The movement of data from July 2025 to June 2026 for calculation of dearness allowance is as follows:

 

The movement of data from July 2025 to June 2026 for calculation of dearness allowance is as follows:

 

How much will the salary increase be? Know the calculation

If the central government approves a 3% increase in DA, employees with minimum basic pay will see a significant increase in their salaries every month:

On 3% DA hike (63% DA): Level-1 central employees, with a minimum basic pay of Rs 18,000, will get a direct benefit of Rs 540 per month (3% of Rs 18,000) in their salary.

On 4% DA hike (64% DA): If DA increases by 4%, the monthly salary of an employee with the same basic pay will increase by Rs 720.

When will the official announcement be made?

Typically, the central government officially announces the DA hike for the second half of the year (July-December) around the festive season in September or October. This increase will be effective from July 1, 2026, and employees will also receive arrears for previous months.