Central government employees and pensioners have got the latest inflation number that will be the basis for calculation of their next Dearness Allowance (DA) and Dearness Relief (DR). The All-India Consumer Price Index for Industrial Workers (CPI-IW) rose by 1.2 points to 154.4 in August 2026, according to data released by the Labour Bureau under the Ministry of Labour and Employment. The index stood at 153.2 in July.
The August number is important for the January 2027 DA/DR revision. It is the second month in the six-month calculation cycle. Based on the latest data, the running calculation has moved to around 65%. But this is not the final January 2027 DA. Four more months of CPI-IW data are still left.
Current DA is 60%, July hike is pending
At present, central government employees are getting 60% DA, while pensioners are getting 60% Dearness Relief. The allowance is revised twice a year, from January and July, based on the CPI-IW data.
The immediate issue, therefore, is the July 2026 DA hike.
Based on the CPI-IW numbers for January to June 2026, the calculation points to a 3 percentage point increase, which would take DA from 60% to 63%.
The July 2026 instalment is still awaiting the formal government announcement. Employee bodies have also been asking the Centre to announce the hike. The Confederation of Central Government Employees & Workers has written to the Finance Ministry seeking an early announcement of the July instalment.
For employees, the delay does not change the effective date. The July instalment is due from July 1, 2026, once approved and notified.
What does August CPI-IW mean for January 2027 DA?
The latest CPI-IW number gives a clearer picture of where the January 2027 DA calculation is heading.
The calculation for January 2027 will use the CPI-IW numbers from July to December 2026. July’s index was 153.2 and August’s number has now risen to 154.4.
The table below shows how the calculation is moving:
| Month | CPI-IW | Running DA/DR calculation |
| July 2026 | 153.2 | 64.36% |
| August 2026 | 154.4 | 65.03% |
| September 2026 | To be released | Pending |
| October 2026 | To be released | Pending |
| November 2026 | To be released | Pending |
| December 2026 | To be released | Pending |
| January 2027 | — | 67% projected if index stays at 154.4 |
The projection of 67% comes with an important condition.
If the CPI-IW remains at 154.4 from September through December, the calculation shown in the available projection table reaches 67.48% by December. After rounding off, this would translate into 67% DA/DR from January 2027.
But employees should not treat 67% as confirmed yet. The CPI-IW numbers for the next four months can change the calculation.
The Labour Bureau said August CPI-IW inflation was 4.96% year-on-year, compared with 3.16% in August 2025. The index is compiled using retail prices collected from 317 markets across 88 industrially important centres. Labour Bureau
Employees could see two DA hikes within a few months
This means central government employees and pensioners are now watching two separate DA revisions.
The first is the July 2026 revision, which is expected to take DA/DR from 60% to 63%, subject to formal approval.
The second is the January 2027 revision. Based on the CPI-IW data available so far, the calculation is moving towards 67%.
So, if both revisions happen as currently projected, DA could move from 60% to 63% for the July-December period and then to 67% from January 2027.
For example, on a basic pay of Rs 50,000, a 3 percentage point increase means Rs 1,500 more in DA every month. A further increase from 63% to 67% would mean another Rs 2,000 a month on the same basic pay.
The actual increase in salary will depend on the employee’s basic pay and other applicable components.
What employees and pensioners are asking for under 8th Pay Commission
The DA discussion is also taking place against the bigger backdrop of the 8th Pay Commission.
Employee unions and pensioner bodies have made several demands before the commission. One of the important demands is the merger of DA/DR with basic pay once it reaches a certain level.
The National Council-Joint Consultative Machinery, in its memorandum, has sought merger of DA/DR with basic pay once it reaches 25%. Other employee organisations have also raised demands for a higher fitment factor, higher minimum pay and changes in pension benefits. These are demands made by employee and pensioner bodies and are not government decisions.
The argument behind the DA merger demand is that DA has become a significant part of the salary because of repeated revisions over the years. If DA is merged with basic pay, it could also affect the calculation of other salary-linked benefits.
However, whether such demands are accepted will be decided through the 8th Pay Commission process and the government’s final decisions.
8th Pay Commission latest update
The 8th Central Pay Commission was constituted by the government on November 3, 2025. Justice Ranjana Prakash Desai is the chairperson, with Prof Pulak Ghosh as part-time member and Pankaj Jain as member-secretary. 8th Central Pay Commission
The commission has already invited representations from central government employees, pensioners, service associations and unions. The deadline for submitting memorandums was June 15, 2026. 8th Central Pay Commission
The commission is now continuing its consultations. Its latest updates show planned visits to Bengaluru on October 7-8 and Mumbai on October 22-23, 2026 for interactions with stakeholders. 8th Central Pay Commission.
For employees and pensioners, therefore, the next few months could be important. The immediate wait is for the July 2026 DA/DR announcement. After that, the CPI-IW numbers from September to December will decide the January 2027 DA/DR calculation. At the same time, the 8th Pay Commission will consider wider demands on salary, allowances and pensions.
Disclaimer: This article is for informational purposes only. The January 2027 DA figure mentioned above is a projection based on available CPI-IW data. The final DA/DR rate will be known only after the remaining CPI-IW numbers are released and the government announces the revised rate.
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