DA Could Reach 68%; Central Government Employees' Salaries Set to Increase Again in January.

Given the current trajectory of retail inflation in the country, the Dearness Allowance (DA) is expected to reach 68% by January 2027. In September 2026, the AICPI-IW (All-India Consumer Price Index for Industrial Workers) rose by 1.1 points to reach 155.5.

The Labour Bureau recently released retail inflation data for September 2026, tracked via the 'All-India Consumer Price Index for Industrial Workers' (AICPI-IW). The AICPI-IW increased by 1.1 points in September compared to August, reaching 155.5. As a result of this surge, the current DA has reached 65.81%. The next announcement regarding a DA hike—effective from January 2027—will depend on the average inflation rate recorded between January and December 2026.

What will the next hike depend on?

Based on the 7th Central Pay Commission (7th CPC) formula, the DA is projected to reach 68% by January 2027. The final DA figure for January 2027 will be contingent upon the inflation data for October, November, and December 2026.

If retail inflation continues to rise at its current pace over the next three months—with the index reaching 156.8 in October, 158.1 in November, and 159.1 in December—the 12-month average would rise to 151.3 (adjusted to the 2001 base year). Under this scenario, the DA for January 2027 would reach 68.56%, which rounds off to 68%. If retail inflation does not rise during October, November, and December—remaining stable at 155.5, the same level as in September—the 12-month average will be 152.375. Based on this, the Dearness Allowance (DA) would be set at 67.78%, effectively amounting to 67%.

What if inflation declines?

Although this is unlikely, given rising global fuel prices and geopolitical instability, even if inflation were to fall and the index returned to the average levels seen between June and August (151.9–154.5), the DA for January 2027 would still remain at 67.23%—effectively 67%.

Currently, central government employees receive a DA of 63%. Based on the aforementioned average, this will increase directly to 68% starting in January 2027, representing a net increase of 5%. Since the Union Cabinet typically grants official approval for the January DA in March or April, employees will receive the full arrears for the period from January up to that month—covering 3 to 4 months—in a single lump-sum payment.