DA Hike July 2025: The All India Consumer Price Index for Industrial Workers (AICPI-IW) for May 2025 has risen by 0.5 point to 144. The index has risen continuously in the three months from March to May — 143 in March, 143.5 in April and now 144 in May.

Looking at this trend, a 3% to 4% increase in dearness allowance (DA) is possible from July 2025. Currently, the DA for central staff stands at 55%. The final DA hike decision will depend on the AICPI-IW data for June 2025, which will be released in early August this year.

If the AICPI-IW index rises by 0.5 point in June 2025 and reaches 144.5, the 12-month average AICPI will increase to around 144.17. After adjusting this average as per the 7th Pay Commission formula, the expected DA for central government employees will be approximately 58.85%.

Rounded off, this would mean DA reaching 59% from the current 55%, resulting in a 4% increase effective from July 2025. This 0.5-point rise in the June index could therefore lead to a slightly higher DA hike than earlier projected.

Source: Labour Bureau

Also read: Centre to reduce commuted pension period to 12 years under 8th Pay Commission? Know what’s changing

DA is calculated using this formula

DA is calculated based on the average AICPI-IW data of the last 12 months. It is decided on the basis of the recommendations of the 7th Pay Commission. The figures from January to May have been received, and they seem to form the basis for a 3% increase. Now the June figure will decide the final DA hike.

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

Here 261.42 is the base value of the index. This formula determines DA based on the monthly average of CPI-IW.

When will DA hike be announced?

Though the new DA will be effective from July 2025, the government usually announces it in September-October, around the festive season. This time too, the same is likely to happen and this announcement can be made around Diwali.

7th Pay Commission in final stage, 8th Commission still in limbo

This DA hike of July-December 2025 will be the last scheduled increase under the 7th Pay Commission as the term of the commission expires on 31st December 2025.

Although the 8th Pay Commission was announced in January 2025, the government is yet to announce the names of the chairman and panel members. Terms of Reference (ToR) have also not come. There were indications from the government that the ToR would be ready by April and the commission would start work, but there is no concrete update so far.

Also read: Central govt pensioners will get LTC benefit like serving employees? Here’s what Centre says

8th Pay Commission may be delayed by 2 years

If we look at the history of previous pay commissions, it takes 18 to 24 months for the recommendations of any commission to be implemented. In such a situation, it is almost certain that the recommendations of the 8th Pay Commission will be implemented only by 2027. This means that central employees and pensioners will continue to get many more DA hikes on their current basic pay.

Comforting thing: Arrears will be received

Although there will be a delay, the government will pay the salary and pension benefits under the 8th Pay Commission as arrears, considering them to be applicable from January 1, 2026. That is, the employees will not only get the benefit, but the arrears amount will also be given in a lump sum.

Also read: Govt staff wants Unified Pension Scheme to be tweaked

Summing up…

While on one hand, the eyes of the employees are fixed on the 8th Pay Commission, at the same time the news of relief is coming in the form of a dearness allowance. If the AICPI-IW figures of June 2025 are also positive like May, then the way for 4% DA hike will be cleared.