Increase in allowances!
All the central government employees are waiting for the news of increase in Dearness Allowance (DA) to be implemented from July 2026. The Labor Bureau has recently released the All India Consumer Price Index for Industrial Workers (AICPI-IW) data for May 2026. This data will play an important role in deciding changes in DA for central government employees. Let us also tell you how much increase can be seen in the DA which will be implemented from the month of July.
Important changes in data
According to the press release of the Labor Bureau, the AICPI-IW increased by 0.9 points to 150.8 in May 2026, while it was 149.9 in April 2026. This recent increase is indicative of a change in inflation trends and will certainly be taken into consideration while calculating the changes in DA to be implemented from July 1, 2026. Even after this increase, the estimated increase in DA remains around 3 percent of the basic pay. Therefore, the final change will depend on AICPI-IW data for June 2026 and government approval. Below is an approximate calculation, which assumes that the increase in AICPI-IW in June will be at approximately the same rate as in May 2026. In such a situation, the data of last 12 months to calculate the increase in DA will be as follows.
How is DA calculated?
In the 7th Pay Commission system, DA is calculated using the average AICPI-IW data of the last 12 months. The formula to calculate it is as follows:
DA = [{(पिछले 12 महीनों का औसत AICPI-IW × 2.88) − 261.41} ÷ 261.41] × 100 − Current DA (%)
If we assume that AICPI-IW grows at the same pace in June 2026, then the 12-month average index is expected to be around 148.63.
Using this data:
148.63 × 2.88 = 428.05 428.05 − 261.41 = 166.64 166.64 ÷ 261.41 = 0.637 0.637 × 100 = 63.7%
Adjusting for the existing DA rate, the estimated increase comes to around 3.7%. The government usually rounds-off the final figures. In such a situation, an increase of 3 percent may be seen in DA.
Data for May 2026 showed that the year-on-year inflation rate was 4.72 percent, which was 2.93 percent in May 2025. Food items, fuel, clothing and other categories contributed to the change in the index. AICPI-IW data of June 2026 will be important for the final calculations. Till then, and before official confirmation by the concerned authorities, the 3 per cent DA increase will remain a guess. The Union Cabinet takes the final decision on these matters after reviewing all the aspects and factors related to the issue.
